SP Angel Morning View -Today’s Market View, Tuesday 19th December 2023

 Fed casts caution on interest rate cuts as focus shifts to key inflation data

MiFID II exempt information – see disclaimer below

Azure Minerals (AZS AU) – Gina Rinehart and SQM team up to buy Azure for A$3.7/share

Bushveld Minerals* (BMN LN) – Vametco 100% consolidation completed

Centamin (CEY LN) – Sukari delivers a 10% mineral reserve increase

Empire Metals* (EEE LN) – More thick titanium intersections drilled at Pitfield and mineralogical assessment underway

Karelian Diamonds (KDR LN) – Closing in on the source of a 2017 diamond discovery

Serabi Gold (SRB LN) – Matilda exploration drilling delivers early-stage encouragement

Sovereign Metals* (SVML LN) – Strong Buy – Rutile vs Ilmenite

Technology Minerals (TM1 LN) – AGM statement highlights Recyclus Li-ion battery recycling business in Wolverhampton, UK

Tertiary Minerals* (TYM LN) – BUY – Earn-in agreement signed with KoBold Metals for drilling in Zambia

Wishbone Gold* (WSBN LN) – Exercising option over WA lithium exploration project

Copper prices push higher despite China’s record smelter output as concentrate shortage looms

• Copper prices have now rallied 8.2% off lows hit in early October.
• The rally has been supported by a weaker dollar, which supports Chinese buying in international markets.
• However, Chinese buying has have fallen through the beginning of December, with the Yangshan refined premium sliding to $92.5/t from $113/t last week.
• Chinese refined output has risen 12% in Novembet to 1.14mt.
• Chinese refined copper is expected to hit 11.8mt this year, up 6.75% yoy.
• Major investment in smelter capacity has been triggered by elevated refining fees, which have started to slide following Cobre Panama’s forced exit from the market.
• Surplus expectations for 2024 have now faded.
• Analysts expect China smelter output to slow into the new year, with lower prices and seasonal effects coming into play. This could support a rally into the Lunar New Year restocking period.
• Shanghai brokers are now net-short, raising the potential for some covering on a rally.

Gold holds flat as traders as Fed officials look to cool Powell’s Treasury rally

• Gold prices have held flat around the $2,026/oz mark following a volatile December.
• Fed officials Williams and Goolsbee have provided some hawkish counter comments to Powell’s FOMC dovishness.
• Goolsbee looked to calm rate cut enthusiasm, temporarily pushing 10-year yields to 3.96% before today’s rally below 3.9%.
• Focus turns to PCE data, Q3 GDP numbers and jobless claims for further guidance on the Fed’s progress against inflation and the US labour market.

Iceland volcanic eruption

• The BBC reports the eruption of a volcano on the Reykjanes peninsula southwest of Reykjavik.
• In anticipation of the eruption following increased activity since October, around 4,000 people were evacuated from the nearby town of Grindavik.
• There are no reports of any injury from the eruption along a 3.5km long fissure which is reported to be discharging lava at “a rate of around 100 to 200 cubic metres per second” according to Iceland’s Meteorological Office.

 Economics

US – San Francisco Fed President (non voting member this year) confirmed the FOMC earlier outlook for rate cuts in 2024.

• Mary Daly said her projections were similar to the median FOMC outlook that pencilled in three 25bp cuts next year.
• Daly also added that more cuts could be appropriate if inflation falls faster.

Japan – The yen fell this morning as the central bank held negative rates unchanged and refused to provide guidance on a potential rate hike.

• Overnight interest rates were left at -0.1%, in line with estimates.
• The Bank of Japan also made no changes to its yield curve controls after the policy was revised in October allowing 10y yields to climb above 1%.

UK – British army is mulling allowing beards

• You know the country is in trouble when the British Army starts changing long held traditions.
• The Army’s century-long ban on beards may be overturned because the Army is turning away potential recruits because of their facial hair (The Economist).
• The Goat Major, who is actually a corporal, who tends the Royal Regiment of Wales’s goat is allowed to have facial hair, for example. So is the goat, which is technically a lance-corporal.
• “An article in the British Medical Journal in 1861 calculated that America lost 36m working days each year to shaving.”
• Doctors took to warning against facial hair in the 1890s as a damp beard was thought to spread germs.
• Back then the army required moustaches, a rule that lasted till 1916 but the fears about the close fit of gas masks, led to these regulations being reversed.

Conclusion: Bearded men and women may now have a further employment options other than geography and geology.

Currencies

US$1.0934/eur vs 1.0919/eur previous. Yen 144.49/$ vs 142.39/$. SAr 18.520/$ vs 18.301/$. $1.267/gbp vs $1.269/gbp. 0.672/aud vs 0.672/aud. CNY 7.145/$ vs 7.131/$.

Dollar Index 102.57 vs 102.47 previous.

Commodity News

Precious metals:

Gold US$2,028/oz vs US$2,023/oz previous

Gold ETFs 85.9moz vs 85.8moz previous

Platinum US$951/oz vs US$953/oz previous

Palladium US$1,196/oz vs US$1,180/oz previous

Silver US$23.92/oz vs US$24/oz previous

Rhodium US$4,425/oz vs US$4,425/oz previous

Base metals:

Copper US$ 8,5360/t vs US$8,541/t previous

Aluminium US$ 2,275/t vs US$2,265/t previous

Nickel US$ 16,565/t vs US$16,900/t previous

Zinc US$ 2,557/t vs US$2,532/t previous

Lead US$ 2,060/t vs US$2,088/t previous

Tin US$ 25,135/t vs US$25,135/t previous

Energy:

Oil US$77.8/bbl vs US$77.0/bbl previous

• Crude oil prices moved higher after BP said it would join several other companies in pausing shipping through the Red Sea due to a spate of attacks on vessels in the region by Houthi rebels. Middle Eastern oil and LNG tankers travel to Europe via the Red Sea and Suez Canal, with Russian crude moving in the opposite direction.
• The UK plans to introduce a carbon border levy from 2027, one year later than the EU, for imports of emissions-intensive goods, which includes iron, steel, aluminium, ceramics and cement.

Natural Gas €33.4/MWh vs €33.2/MWh previous

Uranium UXC US$82.30/lb vs US$81.45/lb previous

Bulk:

Iron Ore 62% Fe Spot (cfr Tianjin) US$133.2/t vs US$134.7/t

Chinese steel rebar 25mm US$581.2/t vs US$582.5/t

Thermal coal (1st year forward cif ARA) US$99.5/t vs US$99.5/t

Thermal coal swap Australia FOB US$141.0/t vs US$143.0/t

Coking coal swap Australia FOB US$322.0/t vs US$322.0/t

Other:

Cobalt LME 3m US$29,135/t vs US$29,135/t

NdPr Rare Earth Oxide (China) US$62,846/t vs US$62,963/t

Lithium carbonate 99% (China) US$12,387/t vs US$12,410/t

China Spodumene Li2O 6%min CIF US$1,380/t vs US$1,380/t

Ferro-Manganese European Mn78% min US$1,050/t vs US$1,048/t

China Tungsten APT 88.5% FOB US$300/mtu vs US$300/mtu

China Graphite Flake -194 FOB US$610/t vs US$610/t

Europe Vanadium Pentoxide 98% 6.1/lb vs US$6.1/lb

Europe Ferro-Vanadium 80% 26.25/kg vs US$26.25/kg

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

Spot CO2 Emissions EUA Price US$76.1/t vs US$76.0/t

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

EV & Battery News

New UK grid platform launched to optimise network balancing

• National Grid ESO launched the first stage of its Open Balancing Platform set to “unlock new levels of precision for the ESO control room.”
• This optimisation will enable control room engineers to send hundreds of instructions to smaller Balancing Mechanism Units, allowing battery storage to “play a more active role in balancing the network.”

BYD catches Tesla in global BEV market share for Q3 ‘23

• Following strong sales in the last quarter, BYD reached a 17% share of the global BEV market. (Counterpoint Research)
• BYD and Tesla both had a 17% share of the global BEV market in Q3.
• Volkswagen was the third placed automaker with an 8% market share.
• The Chinese automaker sold 822,094 passenger NEVs in the third quarter, including 431,603 BEVs, and 390,491 PHEVs, according to figures it  had previously announced.

Company News

Azure Minerals (AZS AU) A$3.69, Mkt Cap A$1.7bn – Gina Rinehart and SQM team up to buy Azure for A$3.7/share

• Azure announced today that it has entered a binding Transaction Implementation Deed with SQM and Gina Rinhart’s Hancock Prospecting.
• The Joint Bidders will acquire 100% of Azure’s shares for A$3.7/share in cash or through an off-market takeover cash offer at A$3.65/share.
• The Transaction is subject to regulatory approvals, but the Azure Board has unanimously recommend the transaction to shareholders.
• Creasy Group and Delphi Group, Azure’s other major shareholders, have supported the Transaction.

Conclusion: The $1.7bn bid has been approved after Mark Creasy and Delphi Group backed a partnership between iron ore tycoon Gina Rinehart and SQM, which already controlled a combined 37.8% of AZS equity. Chris Ellison’s MinRes holds a 13.5% stake in the Company Gina has been intent on establishing herself as a lithium player in WA, having quashed Albemarle’s deal with Liontown earlier this year. Creasy will retain a free-carried 40% stake in the Andover Project, alongside netting a substantial gain from the sale of AZS equity. The Andover project is pre-resource but is expected to hold between 100-240mt @ 1-1.5% Li20. SQM holds rights to 25% of the off-take of any lithium produced at Andover.

Bushveld Minerals* (BMN LN) 2.3p, Mkt Cap £47m – Vametco 100% consolidation completed

BUY – Under Review

• The Company confirmed that all conditions precedent to acquisition of the remaining 26% minority interest in Vametco have now been met.
• The transaction that was first announced earlier in October has been completed.
• BEE consortium has been issued 232.8m new shares for their 26% interest that now represent 13% of the issued share capital in the Group.
• 70% of the consideration shares are subject to a six months lock in period.
• In line with antidilution option, the BEE consortium can now subscribe for up to 39.7m new shares at 3p to maintain its 13% interest in the Group (the provision expires 28 February 2024).

Conclusion: The announcement marks a confirmation of the value accretive deal close that simplifies Group ownership and consolidates interest Vametco that accounts for most of the value in the Group.

*SP Angel act as nomad and broker to Bushveld Minerals

Centamin (CEY LN) 77.75p, Mkt Cap £1,151m – Sukari delivers a 10% mineral reserve increase

Further mineral resource and reserve increases at Sukari

• Centamin reports an overall increase of 28% in its ‘Proven & Probable’ mineral reserves to 7.7m oz including a 10% increase, compared to the October 2023 Life-of- Mine plan, to 5.8moz at the flagship Sukari mine in Egypt and maiden reserves of 1.9moz at the Doropo project in Cote d’Ivoire.
• The Sukari reserve of 153.3mt at an average grade of 1.2g/t gold is within an overall ‘Measured & Indicated’ mineral resource of 315mt at an average grade of 1.01g/t gold follows last year’s increase of 1.3m oz (13%) in the measured and indicated mineral resource inventory at Sukari.
• Approximately 75% of Sukari’s reserves (4.4m oz) lie within the proposed open-pits with a further 1.1moz (8.6mt at an average grade of 4.0g/t) amenable to underground mining and the balance of 0.3moz contained within stockpiles.
• “Following the completion of the DFS drill programme the Doropo M&I Mineral Resources increased by 23% to 77Mt at 1.26g/t for 3.1Moz of contained gold”. Probable reserves of 40.6mt at an  average grade of 1.44g/t gold are all considered to be mineable by open-pit methods.
• Commenting on the updated resource and reserve estimates, CEO, Martin Horgan, said that Centamin’s “improved geological understanding at Sukari has enabled a 500 thousand ounce increase in reserves over the 5.3 million ounce reserve estimated in the recently published LOM plan”.
• He said that “Since 2020 we have delivered 3.5 million ounces of Mineral Reserve growth, before mining depletion, exceeding our 3 million ounce target. This has been driven by reserve growth of almost 1.6 million ounces at Sukari and a maiden 1.9 million ounce reserve at Doropo.”
• Mr. Horgan also confirmed that “During the first half of 2024, we will release the results of the maiden drilling campaign across our Egyptian exploration portfolio and will also aim to publish the updated reserve numbers for Doropo as part of the ongoing DFS”.

Conclusion: Centamin continues to add to its mineral resources and reserves, with replenishment of the mineral inventory at Sukari and a maiden reserve at Doropo as well as results from Egyptian exploration drilling expected in H1 2024.

Empire Metals* (EEE LN) 10.6p, Mkt Cap £60m – More thick titanium intersections drilled at Pitfield and mineralogical assessment underway

(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 provides the initial five drillhole results from its 40 hole, 5,718m RC programme at Pitfield.
• The Team has now completed the 40 drillhole programme.
• Highlights from the first five holds include:
  • RC23KAD001: 148m @ 3.4% TIO2 from surface
  • RC23KAD002: 148m @ 3.28% TiO2 from surface
  • RC23COS002: 90m @ 4.02% TiO2 from 6m
  • RC23COS003: 60m @ 3.97% TiO2 from 10m
  • RC23COS004: 154m @ 5.51% TIO2 from surface.
• The results suggest the sandstone beds host the higher-grade titanium mineralisation, with future exploration set to identify and delineate the thicker sandstone-rich beds.
• The remaining 35 RC holes are evaluating the length of the magnetics-gravity anomaly.
• Assay results are expected early in 1Q24.
• Some of these holes hit excessive groundwater and were terminated early but hit c.50m of TiO2-enriched sedimentary rocks.
• Electron Probe Microanalysis has been employed to test the RC rock chip samples to identify the mineral assemblage within the rocks.
• LIBS and the TESCAN Integrated Mineral Analyzer will also be used to determine the mineralogical composition of the rock.
• Mineralogical studies are intended to define ‘representative host mineral assemblages’ and ’provide important information towards economic assessment.’
• Going forward, a third RC drill programme is scheduled for February 2024 over 6,000m for 40 drill holes to test areas expected to host high-grade, near-surface TiO2 mineralisation.

 *SP Angel acts as nomad and broker to Empire Metals

Karelian Diamonds (KDR LN) 2.3 pence, Mkt Cap £2.4m – Closing in on the source of a 2017 diamond discovery

• Karelian Diamonds has announced that basal till sample results from its diamond exploration project in Finland’s Kuhmo region, indicate that two of the sample sites may be “close to the source of the green diamond previously discovered by the Company” and announced in 2017.
• The company says that the “targets sampled were up-ice from the location of the green diamond discovery along a kimberlite indicator mineral train and were identified by geophysics and kimberlitic indicator analysis”.
• Analysis of the ‘indicator’ garnet minerals “suggests close proximity to a kimberlite source, from which the green diamond may have been derived”.
• Karelian Diamonds says that sampling of the distribution of these indicators in an ‘up-ice’ direction showed that they “were absent in locations further up-ice from the two anomalous locations … [suggesting that] … the green diamond kimberlite source is closer to and within our targeted area”.
• Chairman, Prof. Richard Conroy, described the results of the sampling and associated exploration as “most encouraging … [and said that] … we may be getting very close to locating the source of the green diamond which the Company discovered”.

Conclusion: Karelian Diamonds is narrowing in on a potential diamond source in Finland, however, substantial further exploration may be required to develop a specific resource target. The current weakness in the rough diamond market suggests that Karelian Diamonds well have time to advance its programme in a measured and systematic fashion.

Serabi Gold (SRB LN) 35p, Mkt Cap £27m – Matilda exploration drilling delivers early-stage encouragement

1. Following the completion of 7.597m of drilling in 21 holes at the principal geochemical anomaly at its Matilda project in northern Brazil, Serabi Gold has reported the exploration highlights of the 2023 campaign which is part of the Exploration Alliance with Vale.
2. Today’s announcement confirms that, with results received from 19 of the holes, the “results have extended mineralisation to over 1 kilometre along a WNW-ENE trending de-magnetised zone. The system remains open to west, east, north, and at depth … and drilling has not yet delineated the size of the system”.
3. “The drilling to date has delineated a shallow mineralised zone with an exploration target with a potential range of between 21 million tonnes (“Mt”) @ 0.40% Cu up to 81Mt @ 0.28% Cu … [although the company cautions that the] … potential volume and grade is however, conceptual in nature as insufficient exploration has been completed to define a mineral resource and it is uncertain if a mineral resource estimate will be delineated”.
4. Among the drilling results highlighted today are;

1. • An intersection of 21.45m at an average grade of 0.40% copper and 0.11g/t gold from a depth of 95.55m in hole 23-MT-010; and
   • A 25.00m wide intersection averaging 0.34% copper and 0.09g/t gold from 107.00m depth in hole 23-MT-015; and
   • An intersection of 34.00m at an average grade of 0.34% copper and 0.10g/t gold from a depth of 142.00m in hole 23-MT-016.

1. The company explains that the drilling hit “narrow zones of high-grade copper mineralisation … [which it interprets as] … alteration “offshoots” that lie above and laterally to the main porphyry core which is believed to be at depth”.
2. Describing the drilling in more detail, Serabi Gold says that holes 23-MT-010, 011 and 012 “stepped out to the north of the known mineralisation and all returned grades of over 0.35% Cu within intervals greater than 10m, indicating the system is open to the north and north-west”.
3. Holes 23-MT-015, 016, 017 and 019 “were drilled to test the lateral extents of the higher-grade core intercepted in drillholes 23-MT-004 and 23-MT-006, drilled during the first phase of drilling. All four drillholes intercepted zones over 20m of 0.34% Cu including discrete zones of up to 1.3% Cu, indicating that the higher-grade zone is consistently mineralised. 23-MT-021 was drilled beneath holes 23-MT-004 and 23-MT-006 to test the zone at depth and is pending assay results”.
4. “Drillhole 23-MT-018 stepped out to the east of known mineralisation and returned grades of up to 0.33% Cu over 16m, indicating that the system is open to the east”.
5. As well as the drilling, induced polarisation (IP) geophysical surveying over an area of 400m x 200m “will provide a basis to plan the 2024 exploration drilling campaign aiming for the extensions of the current mineralization zones and their potential source”.
6. Commenting on the exploration, CEO, Mike Hodgson, said that “We believe that the Matilda prospect is still in its infancy and has much more to deliver … [and that] … Matilda’s geological characterisation as an Alkalic Porphyry style system helps guide our exploration strategy and suggests that further results can come from deeper drilling”.
7. He also said that “the discovery of new potential porphyry systems at Ganso and Cinderela, in addition to the other discoveries in the region, are advancing the Tapajos province as an emerging copper province in the north of Brazil, and Serabi’s land package and quality data puts us in an ideal position to take advantage of this”.

Conclusion: Encouraging results from early-stage drilling at the Matilda project have yet to define the margins of the mineralisation which now extends at least 1km along a WNW trending zone with the depth extent also still to be defined.

*An SP Angel analyst has visited the Serabi’s gold mining operations in Brazil

Sovereign Metals* (SVML LN) 22.40p, Mkt Cap £248m – Rutile vs Ilmenite

Valuation 55p

• Sovereign Metals remind us and investors of the key differences between Rutile and Ilmenite.
  • Rutile (Tio2) is >95% TiO2
  • Ilmenite (FeTi)3) is 30-60% TiO2.
• Carbon footprint:
  • Rutile is a direct use feedstock with a much lower carbon emissions.
  • Ilmenite requires far more energy to covert into titanium dioxide causing greater greenhouse gasses
• Pricing:
  • Rutile sells for US$1,908/t
  • Ilmenite is priced at US$340/t
  • Base Resources forecast a rutile price of US$1,369/t for 2025-2030/t and $1,259/t from 2031-2034
  • TZMI rutile inducement price:  $1,117/t from 2035
• Resource:  
  • Rutile: Kasiya is the world’s largest rutile deposit and holds 18mt (1.8bnt @ 1.01%) of contained rutile on its JORC resource estimate.
  • Maiden Probable Ore Reserves: 538mt grading 1.03% rutile and 1.66% graphite for 8.9mt of contained graphite on ~30% of the total mineral resource
  • This is 10mt tonnes larger than Sierra Rutile’s Sembehun resource in Sierra Leone and 17.3mt larger than that at Base Resources’ Kwale mine in Kenya, the latter set to close in December 2024.
  • Graphite: Kasiya’s graphite is interleaved with rutile in the deposit in sedimentary layers which may be distinctly mined as one of the world’s lowest operating cost on a by-product basis.
• PFS results:
  • Throughput:
    • Stage 1 – 12,000,000tpa,
    • Stage 2 – 24,000,000tpa
  • NPV (8%) post-tax US$1,605m ,NPV (10%) post-tax US$1,205m
  • IRR of 28% ungeared
  • Mine life: 25 years – given the scale of the overall resource the mine life could extend to >60 years making this a multi-generational mine
  • EBITDA: US$415mpa, Revenue: US$16bn over 25 years, Payback: 4.3 years
• Rutile Production:
  • Sovereign Metals: 222,000tpa with a 96% product grade
  • Base Resources:
    • Kabwe:  35,000-41,000 of rutile next year from 62,000-73,000t in 2023.
    • Toliara:  6,000-9,000tpa of rutile from 2.6mt MRE with 1.0% rutile content
• Valuation: Taking 33% of the NPV@10% gives £331m. Dividing this by the fully diluted number of shares and options gives a value of 55p/s.
• Recommendation:  We recommend Sovereign Metals as a Strong Buy due to the significant difference in value between its shares and the NPV@10%.

Conclusion:  Sovereign has the world’s largest rutile resource at 1.8bn grading 1.01% rutile. Sierra Rutile, the world’s largest rutile producer will operate for a further three years before shutting down.

*SP Angel act as Nomad and broker to Sovereign Metals.  

Technology Minerals (TM1 LN) 1.02p, Mkt Cap £15m – AGM statement highlights Recyclus Li-ion battery recycling business in Wolverhampton, UK

(Technology Minerals holds 48.35% of Recyclus Group Ltd)

(Global Battery Metals currently holds 55% in Leinster with 45% held by Technology Minerals Plc. Global Battery Metals can earn into 90% on exercise of a third option with $1m of expenditure and payment of €200,000 in cash or shares)

• Technology Minerals highlight progress at Recyclus Group Ltd where the hold 48.35% and is planning on acquiring the remaining shares in Recyclus that it does not already own.
• Recyclus is now permitted and in commercial production.
• The recycling plant is targeting the recycling of 8,300t of Li-ion batteries in its first full year of production on single-shift operation.
• Production could rise to 22,000tpa of licenses capacity through moving to three-shift operation by 2025 if the business is able to source sufficient numbers of battery packs.
• Sales from end September to date have realised some £372,000 on a mixture of gate fees on the acceptance of Li-ion batteries for processing, and on the sale of other recoveries such as copper and aluminium, from lead acid battery recycled material and from the battery shredder project.
• Recyclus has achieved up to the targeted 45% net black mass yield which generally contains lithium, manganese, nickel, and cobalt for reprocessing and sale back into the battery supply chain.
• The best market for black mass right now is international with a TFS ‘Transfrontier Shipment of Waste’ licence required for imports. This can take up to 12 weeks to obtain.
• Offtake: Recyclus is at advanced stage discussions with several major organisations for long-term offtake with pre-pay arrangements against future black mass production.
• Recyclus is currently accumulating inventory of black mass on receipt of the TFS permit and offtake agreements.
• Recyclus are also installing ‘LiBatt’ boxes for the storage of used Li-ion batteries at Volvo retail sites in Bristol, Reading and Oxford.
• The LiBatt boxes are able to store and transport used Li-ion batteries safely.
• Recyclus is a pioneer in UK battery recycling technology in collaboration with Warwick and Birmingham Universities.
• The business recently received a £1.96m grant from Innovate UK to create a mobile battery recycling truck capable of safely handling any type of Li-ion battery.
• Management have identified a target UK site for its second Li-ion battery recycling plant and is in discussions with authorities to accelerate its permitting.

Conclusion: Technology Minerals and Recyclus appears to be making rapid progress on their combination while Recyclus is expanding its production capacity. We look forward to further news on the sourcing of sizeable tonnages of Li-ion batteries and black mass along with further pre-pay offtake agreements.

Tertiary Minerals* (TYM LN) 0.17p, Mkt cap £3.5m – BUY – Earn-in agreement signed with KoBold Metals for drilling in Zambia

• Tertiary Minerals’ 96% owned subsidiary, TMZ, has signed a definitive earn-in with KoBold Metals.
• The agreement concerns Tertiary;s Konkola West Copper Project in Zambia.
• Upon regulatory approval, Tertiary KoBold will be committed to drill a minimum of two holes for a total of 2,000m within 14 months.
• This Stage 1 drilling programme must start no later than May 2024 – the first drill site has been selected.
• The completion of Stage 1 will form a JV company, with TMZ holding 39%, KoBold holding 51% and Mwashia, Tertiary’s local partner, holding an additional 10%.
• Mwashia will be free carried by KoBold or bought at any time for US$3.5m.
• Should KoBold with to increase its ownership in the JV to 70%, it will be required to spend US$6m in cumulative expenditure on exploration over a four year period, diluting TMZ’s interest to 20%. Mwashia will retain a 10% carried stake.
• TMZ will hold the option to contribute in line with its shareholding to additional exploration costs or dilute its interest.
• Dilution of TMZ’s interest to a 10% shareholding will automatically convert into a 1% NSR royalty payable over a 13-year period from the start of commercial production.

Conclusion: This is a major development for Tertiary’s Zambian copper story. KoBold Metals provides both deeper pockets and a strong technical team that will enable deep diamond drilling warranted at Konkola West. KoBold is now established in Zambia and has been active in the recent field season drilling out the Mingomba Copper Deposit adjacent to Konkola West. Drilling will target similar, deep-dipping high grade copper ore-shale visible at Konkola, Lubambe and Musoshi.

*SP Angel acts as Nomad and Broker to Tertiary Minerals

Wishbone Gold* (WSBN LN) – 1.4p, Mkt Cap £3.6m – Exercising option over WA lithium exploration project

See link for recent note: CLICK FOR PDF

• Wishbone Gold reports that, following appropriate due-diligence by its technical team, it is exercising its option over the Crescent East Lithium and Gold Project located approximately 260km south of Port Hedland in the Pilbara district of W Australia.
• Gold mineralisation, including as nuggets, has been confirmed by the company’s geological team in the licence area where historical sampling reported high grades in rock chip sampling.
• The project is in the Mosquito Creek Basin area which the company reports “is attracting heightened exploration interest from several companies”.
• In addition to the gold occurrence, the southern margins of the licence are reported to be of interest for lithium exploration and Wishbone Gold acknowledges that this “needs to be further explored … with a geochemical sampling program”.
• The company will issue ~18.6m additional shares, equivalent to approximately “£400,000 to pay the vendors (being Mining Equities Pty Ltd and CSI One Ltd)”.  We calculate that the shares issued to the vendors represent approximately 7% of the enlarged company.
• Commenting on the transaction, Richard Poulden, Chairman, said that Wishbone Gold intends to add to its exploration holdings in the area.
• Conclusion: Following a positive outcome to its due diligence process, Wishbone Gold is exercising its option to acquire the Crescent East exploration project in the Pilbara.  We await news from the company’s exploration of the project.

*SP Angel acts as a Broker for Wishbone Gold

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.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

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.

MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.

A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).

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 of less than 15%

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