SP Angel Morning View -Today’s Market View, Tuesday 1st October 2024

Gold edges higher as Russian Ministry of Finance plans to boost precious metals purchases in 2025

MiFID II exempt information – see disclaimer below

American West Metals (AW1 AU) – Suspension

Anglo Asian Mining* (AAZ LN) – Agitation leaching plant production resumed

Barrick Gold (GOLD US) – Agreement reached with Mali government

Caledonia Mining* (CMCL LN) – Solar power plant at the Blanket mine, Zimbabwe

Cobra Resources (COBR LN) – Bench scale test results from Boland project, South Australia

Ionic Rare Earths (IXR AU) – UK funding for REE recycling business

Orosur Mining* (OMI LN) –Annual results and share placing

Power Nickel (PNPN CN) – Assay results from Lion Zone Discovery

Sibelco NV (SCRVP EN) – Impact of Hurricane Helene on Spruce Pine quartz mine

Tribe Technology (TRYB LN) – Update on autonomous reverse-circulation rig

Versarien* (VRS LN) – Agreement with Balfour Beatty to develop a range of low carbon, graphene-infused, 3D-printable mortars suitable for civil construction

Gold ($2,644/oz) edges higher as Russian Ministry of Finance to boost precious metals purchases in 2025

• Media reports have suggested that the Russian Finance Ministry intends to buy 52bn rubles worth of precious metals and stones. (INTERFAX via Bloomberg)
• This will include platinum and palladium, which have not formed part of the strategic reserves since 2012.
• The Ministry is aiming to boost the ‘liquid assets in the State Fund of Russia.’
• Gold has been a major beneficiary of Central Bank buying, with China, Russia and Turkey all adding to holdings significantly over the past few years.
• The update also suggested plans to sell small-sized diamonds, brilliants and other stones with limited liquidity.
• Gold has climbed to $2,644/oz following a small sell-off, likely reflecting profit taking on overextended positioning.
• Trader focus now turns to jobs data this week, with ADP employment figures followed by NFP jobs report due Friday.
• The Fed is paying close attention to potential signs of weakening in the labour market, so this week is expected to provide important guidance for rate cuts going forward.

Copper ($9,895/t) prices ease as China holiday triggers profit taking after rally

• Copper prices have eased from recent highs over $10,000/t, with China’s Autumn holiday triggering funds to take profits after the stimulus-induced rally.
• Copper enjoyed a sustained rally amid a series of support measures for Chinese property.
• Iron ore has also weakened from recent highs of $111/t.
• Freeport’s Indonesian Manyar is reportedly delayed until November owing to water and steam leakage, Reuters reports.

Global EV market to reach $2 trillion by 2033

• The global EV market, valued at $255bn in 2023, is projected to grow to $2.1tn by 2033, driven by a CAGR of 23% (Axis Securities)
• India is expected to become a key player in this global EV revolution, with its market projected to grow from 1.7m units in FY24 to 10m units annually by 2033.
• Factors propelling India’s EV growth include supportive government policies, increased product introductions, and reductions in bill of materials costs.
• The Indian government has committed approx. $1.3bn in subsidies over the next two years to encourage the adoption of electric two-wheelers, three-wheelers, and buses.
• Additionally, $60m has been allocated for electric trucks and another $60m crore for e-ambulances to modernise emergency services.
• A key part of India’s EV push is the development of charging infrastructure, with almost $300m dedicated to installing public charging stations across the country.
• The government has also made EVs more affordable by implementing a lower tax rate of 5%, compared to 28% for hybrids and 49% for traditional ICE vehicles.

EV batteries to last 20 years or more, Geotab Data Reveals

• Geotab data shows EV batteries can now last 20+ years on average (EV Fleet World).
• Analysis of 5,000 EVs over 1.5 million days of telematics data shows annual battery degradation averages 1.8%, down from 2.3% in 2019.
• Best-performing EV models have an even lower degradation rate of 1.0% annually.
• Most EV batteries will outlast the vehicle’s usable life, debunking myths about battery reliability.
• High-use batteries show no significant increase in degradation, making EVs more cost-effective with frequent use.
• Geotab’s research suggests fleets can save over £13,000 per vehicle in seven years by switching from ICE to EVs.

This is Why Gold is Rising and It Will Probably Continue:

• Podcast: https://audioboom.com/posts/8547593-john-meyer-this-has-one-of-the-lowest-risk-profiles-i-ve-seen-for-a-long-time

Economics

US – Jerome Powell said the central bank is committed to lowering rates “over time” while highlighting the economy remains on solid footing.

• Comments saw markets slightly dialling back expectations for the size of forecast rate cuts lifting market yields.
• “This is not a committee that feels like it’s in a hurry to cut rates quickly,” Powell said.
• “Ultimately we will be guided by the incoming data. And if the economy slows more than we expect, then we can cut faster. If it slows less than we expect, we can cut slower.”
• The latest dot plot released in September guides for two more rate cuts versus market expectations for the Fed to go for three before year end.

Japan – New PM Shigeru Ishiba called for a national election on October 27.

Eurozone – Inflation continues to trend lower adding to expectations for a rate cut at the coming ECB meeting.

• Markets are expecting two 25bp rate cuts at each of remaining ECB monetary policy meetings in October and December.
• CPI (%mom, Sep/Aug/Est): -0.1/0.1/0.0
• CPI (%yoy, Sep/Aug/Est): 1.8/2.2/1.8
• Core CPI (%yoy, Sep/Aug/Est): 2.7/2.8/2.7

Germany – The economy recorded the second consecutive month of falling prices in September.

• On annual basis, headline inflation slowed sub 2% for the first time since February supporting the case for a rate cut at the coming ECB meeting.
• Preliminary CPI EU Harmonised (%mom, Sep/Aug/Est): -0.1/-0.2/-0.1
• Preliminary CPI EU Harmonised (%yoy, Sep/Aug/Est): 1.8/2.0/1.8

Currencies

US$1.1123/eur vs 1.1164/eur previous. Yen 143.99/$ vs 142.05/$. SAr 17.308/$ vs 17.067/$. $1.335/gbp vs $1.339/gbp. 0.691/aud vs 0.693/aud. CNY 7.019/$ vs 7.015/$.

Dollar Index 100.92 vs 100.38 previous

Precious Metals

Gold US$2,643/oz vs US$2,658/oz previous

Gold ETFs 83.3moz vs 83.5moz previous

Platinum US$983/oz vs US$999/oz previous

Palladium US$996/oz vs US$1,011/oz previous

Silver US$31.3/oz vs US$31.6/oz previous

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

Base metals:   

Copper US$9,877/t vs US$10,053/t previous

Aluminium US$2,621/t vs US$2,643/t previous

Nickel US$17,675/t vs US$17,170/t previous

Zinc US$3,116/t vs US$3,105/t previous

Lead US$2,116/t vs US$2,128/t previous

Tin US$33,420/t vs US$33,270/t previous

Energy:           

Oil US$71.1/bbl vs US$73.0/bbl previous

Natural Gas €38.2/MWh vs €39.0/MWh previous

Uranium Futures $81.8/lb vs $81.9/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$108.0/t vs US$111.9/t

Chinese steel rebar 25mm US$494.9/t vs US$488.3/t

Thermal coal (1st year forward cif ARA) US$124.8/t vs US$124.3/t

Thermal coal swap Australia FOB US$148.5/t vs US$144.5/t

Other:  

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

NdPr Rare Earth Oxide (China) US$60,980/t vs US$61,016/t

Lithium carbonate 99% (China) US$10,330/t vs US$10,336/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$335/mtu vs US$335/mtu

China Graphite Flake -194 FOB US$445/t vs US$445/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$321/t vs US$321/t

China Rutile Concentrate 95% TiO2 US$1,346/t vs US$1,347/t

Spot CO2 Emissions EUA Price US$62.9/t vs  US$62.9/t

Brazil Potash CFR Granular Spot US$282.5/t vs US$282.5/t

Germanium China 99.99% US$2,775.0/kg vs US$2,775.0/kg

China Gallium 99.99% US$455.0/kg vs US$455.0/kg 

Battery News

Ford offers free EV chargers to boost sales and ease range anxiety

• Ford is offering free home chargers and installation to buyers of its EVs  until the end of the year (Bloomberg).
• The promotion applies to its three EV models: Mustang Mach-E, F-150 Lightning, and E-Transit.
• This initiative aims to reduce range anxiety, encouraging buyers to charge their EVs at home.
• Ford’s research shows that over 80% of EV charging happens at home.
• The incentive includes a $1,310 charger and installation, or a $2,000 cash incentive for buyers unable to install a home charger.
• The company expects to lose up to $5.5bn from its EV business in 2024.

BYD recalls 97,000 EVs due to steering fault and fire risk

• BYD is recalling nearly 97,000 EVs due to a steering control unit fault that may pose a fire risk. (Reuters)
• Affected models include Dolphin and Yuan Plus EVs produced between November 2022 and December 2023.
• BYD dealers will implement a physical fix for the issue in the recalled vehicles.
• Dolphin and Yuan Plus are top-selling models, accounting for 26% of BYD’s 3m cars sold in 2023.
• This is a rare recall for BYD, with a similar recall in 2022 involving a small batch of Tang plug-in hybrids.

Stellantis has also just announced a recall of 194,000 plug-in hybrid Jeep SUVs following similar fire risks, due to an issue with a battery component.

CATL production site catches fire

• A CATL production site in Ningde, Fujian, where the company is headquartered, caught fire, in what is a rare incident in the industry.
• The fire reportedly broke out at the site around 11am local time.
• Local news reported that around a dozen fire engines attended the fire and that it was still not completely under control by 2pm.
• It’s not known what products are made at the manufacturing facility and who their main customers are.

Company News

American West Metals (AW1 AU) SUSPENDED – Suspension

• The Company is in trading halt pending a capital raise.

Anglo Asian Mining* (AAZ LN) 93p, Mkt Cap £106m – Agitation leaching plant production resumed

BUY

• Agitation leaching circuit (AGL) commenced normal production at the Gedabek processing complex in Azerbaijan.
• The Company commenced commissioning restart of the plant once authorities allowed to start tailings dam wall raise earlier in August.
• The plant is reported to have produced 523oz since resumption of production.

Conclusion: Good to hear that operations are gradually resuming production after AGL and FLO circuits were put on care and maintenance in August last year as the team awaited official authorisation to raise Gedabek tailings dam wall. Dam wall raise construction is expected to be completed in November, same month flotation circuit (FLO) is guided to restart. AGL and FLO account for 70-80% of Group production with FY25 output expected to grow significantly taking advantage of high commodity prices.

*SP Angel acts as nomad and broker to Anglo Asian Mining

Barrick Gold (GOLD US) $20, Mkt Cap $35bn – Agreement reached with Mali government

• Barrick reported yesterday that they have reached a resolution to ongoing disputes over the Loulo and Gounkoto mines.
• The details of the proposal will be made public once the terms are finalised.
• Four Barrick employees were reportedly arrested over the weekend and detained, but have since been released according to Bloomberg.
• Al-Qaeda claimed responsibility for an attack in Bamako in mid-September, which targeted a military training school.
• Mali is working on bringing more companies under the 2023 mining code, with Allied Gold and B2Gold recently reaching settlements with the Government.

Caledonia Mining* (CMCL LN) 1090p, Mkt Cap £204m – Solar power plant at the Blanket mine, Zimbabwe

• Caledonia Mining reports the sale of its 12.2MW solar power plant at its Blanket mine for $22.35m plus an exclusive agreement with the purchaser, CrossBoundary Energy (CBE), for the continuing supply of energy from the plant.
• CBE is described as a “leading developer, owner and operator of distributed renewable energy solutions for businesses across Africa … [which provides cheap and clean] … energy through power purchase and lease agreements”.
• The sale realises a profit for Caledonia Mining on the $14.3m construction cost of the facility and ensures that “approximately a fifth of Blanket Mine’s daily electricity requirement continues to be met by renewable power”.
• In the context of the power supply irregularities of ZESA’s distribution grid, we consider that access to reliable power from the solar facility provides important operational resilience for Blanket’s operations.
• The original construction cost of the plant in 2020 was financed by a $13m offering of Caledonia’s shares in the US and the company says that the proceeds of the sale “will be reinvested in Caledonia’s other projects that are expected to yield a higher return to our shareholders and will have the added benefit of focussing management’s attention on our core business of gold mining and exploration”.
• Commenting that the sale of the solar power plant allows Caledonia Mining to focus on its “core business of mining” CEO, Mark Learmonth, described CBE as having “vast expertise in delivering and running renewable energy projects” and said that the company is “already working with them to deliver a meaningful extension to the plant, and we will be considering renewable energy solutions at our other development projects in due course”.

Conclusion: The sale of the solar power plant at Blanket to a specialist operator secures continuing access to renewable power for the mine allowing management to focus on its core mining business, including the Bilboes project, while providing the added benefit of delivering a meaningful profit on the transaction.

*SP Angel mining analysts have visited Caledonia’s mining operations in Zimbabwe

Cobra Resources (COBR LN) 1.18p, Mkt cap £7.5m – Bench scale test results from Boland project, South Australia

• Cobra Resources reports that bench scale testing has demonstrated that low impact ISR (in-situ-recovery) techniques are feasible for the recovery of rare-earth minerals from its Boland rare-earths project in the Eyre Peninsula of South Australia.
• Tests show that relatively straightforward adjustments to the pH (from 7.1 to 3.6) can deliver recovery rates of 50% of the total rare-earths oxides (TREO) and 48% of the more valuable Magnet Rare Earth Oxides (MREOs).
• The company says that testing is continuing and that “recoveries are expected to increase”.
• Cobra Resources says that the optimisation testing has reported “recoveries of up to 84% Neodymium and Praseodymium (“NdPr”) and 88% Dysprosium and Terbium” which are important elements for energy transition tecnologies.
• Column tests using a sulphuric acid lixiviant showed consumption rates of 15kg/tonne of ore treated supporting “a low cost, simple process for purification” with low levels of impurities.
• CEO, Rupert Verco, welcomed the results and said that they show that an operation at Boland “could produce critical heavy rare earth metals sustainably and from a cost base that could be competitive with the lowest quartile of REE miners globally”.
• The company has previously explained that ISR techniques have been used historically to recover uranium in South Australia and confirms that today’s results “support that, with minor optimisation, ISR techniques should enable non-invasive and low-cost production of critical REEs from Cobra’s Boland discovery”.
• The company has previously indicated that it expects to publish a scoping study in 2025.

Conclusion: Bench-scale testing has produced encouraging results supporting the potential for ISR to recover rare earths at Boland.  We wonder whether the company will test at a larger pilot scale to validate the lab work and l look forward to the scoping study, expected next year to provide further insight into the project.

Ionic Rare Earths (IXR AU) A$0.01, Mkt A$39m – UK funding for REE recycling business

• The Company announced an award of two new grants for a total of £470k to its wholly owned subsidiary Ionic Technologies.
• The first grant for £292k is provided in relation to the ‘REEValuate’ Project managed in collaboration with UK-based metal and alloys manufacturer Less Common Metals (LCM) and Germany-based magnet manufacturer Vacuumschmelze (VAC) to produce magnets containing 100% recycled HREEs and LREEs.
• Under the partnership, VAC will provide pre-consumer NdFeB magnet scrap (swarf) to Ionic Technologies, which will use its patented technology to produce high purity magnet REOs from the scrap at its Belfast Demonstration Plant.
• LCM will then use its unique technology to reduce the oxide to Rare Earth metals and alloys, supplying them back to VAC at the required specification for magnet production.
• The second grant for £178k is provided by the UK government to advance Ionic Technologies led ‘MAGNOSTIC’ collaboration.
• The project is studying advanced, demagnetisation solution for end-of-life permanent magnets, working in partnership with Materials Processing Institute (MPI) and Swansea University, a centre of excellence for metal processing and handling.

Orosur Mining* (OMI LN) 3.8p, Mkt Cap £4.6m –Annual results and share placing

(Anzá 100% indirect ownership proposed)

• Orosur Mining reports full year results for the period to May 31^st 2024.
• The Company also announces a successful equity placing, raising gross proceeds of £835k by placing 30,034k shares at 2.78p.
• The subscribers will also be eligible to purchase an additional share at 3.7p for every two placing shares subscribed.
• The annual results show Orosur’s successful re-acquisition of the Anza Project in Colombia from the Newmont/Agnico Eagle JV.
• Orosur is now aiming to recommence drilling at the high priority Pepas gold project
• In Argentina, sampling and ground-based exploration is to be conducted to define drill targets.
• The Company has identified a quartz vein structure prospective for an epithermal gold/silver deposit, with potential similarities to Cerro Negro and Cerro Vanguardia.
• Argentine focus will is currently on obtaining drilling permits before the year end.
• In Nigeria, the Company has identified several lithium prospects, and reports several pegmatites returning lithium over 2% Li2O.
• In Brazil, the Company has decided to terminate its JV agreement over the Ariquemes tin project to focus on other prospects.
• Orosur held $1,138k in cash as of May 31^st, $500k today and expects to receive gross proceeds of $1,119k from their placing reported yesterday.

*SP Angel acts as Nomad and Broker to Orosur Mining

Power Nickel (PNPN CN) C$0.8, Mkt Cap C$150m – Assay results from Lion Zone Discovery

• Power Nickel, who are progressing the Polymetallic Lion Zone discovery, report assay results.
• The summer programme has yielded highlights to date of:
  • PN 24-063 – 5m at 4.41% Cu, 0.48g/t Au, 0.47% Ni and 25g/t Ag from 428
  • PN 24-064 – 2.15m at 0.49% Cu, 0.21g/t Au, 0.1% Ni and 3g/t Ag from 452m
  • PN 24-065 – No significant Value
  • PN 24–066 – 12m at 0.65% Cu, 6.4g/t Pd, 0.06% Ni, 4.53g/t Ag
  • PN 24-067 – 12m at 1.75% Cu, 1.99g/t Pd, 8.54g/t Ag, 0.14% Ni.
• The exploration team is currently exploring a scenario in which the Lion Zone is transposed into a deformation corridor or fault, with the mineralised zone thickening over the other tside of the fault.
• As a result, they plan to conduct step out drilling ‘a few hundreds of metres from the discovery zone, and explore for such potential offsets.’
• Further assay results from this programme are due shortly.

Sibelco NV (SCRVP EN) €5,850 Mkt Cap €2.54bn – Impact of Hurricane Helene on Spruce Pine quartz mine

• Sibelco announces impacts of Hurricane Helene on their Spruce Pine community in North Caroline.
• The Company reports that the hurricane has caused ‘widespread flooding, power outages, communication disruptions, damage to critical infrastructure.’
• Sibelco has suspended operations from the 26^th September.
• Spruce Pine produces high-quality quartz to feed into the semiconductor, photovoltaic and optical fibre industries.

Tribe Technology (TRYB LN) 3.75p, Mkt cap £10.8m – Update on autonomous reverse-circulation rig

• Tribe Tech reports that tests on its autonomous RC drilling rig at the Australian Automation & Robotics Precinct (AARP) have “concluded that further significant software development and systems integration work is required for the Drill Rig’s operation to meet the required specifications prior to dispatch of the Drill Rig to the customer’s mine site”.
• The company expects that the “additional software updates … [and] … field commissioning” will be completed in December and that it “now expects the Drill Rig to arrive at a tier one mine site for field installation in the early part of the second quarter of 2025”.
• The company explains that the additional work will increase costs and require additional resources and that TribeTech “currently plans to reduce circa 20% of its fixed costs in the fourth quarter of 2024. Any such cost reductions are anticipated to come from the Company reducing its operational costs”.
• Expressing disappointment at the unforeseen delays, Chief Executive, Charlie King, confirmed that its customer “McKay Drilling are very supportive in completing these critical milestones and continue to collaborate with our technical team to demonstrate this innovative product”.
• “the Board is now pursuing additional funding for its nearer term working capital requirements”.

Conclusion: We view these delays, while clearly disappointing, as teething troubles in the development of a drilling technology which potentially transforms drilling operations, productivity, and safety in the 21^st century. We expect a number of drilling contractors and major miners to take a close interest in the Tribe Tech rig and in supporting its funding.

Versarien* (VRS LN) 0.069p, Mkt Cap £1.9m – Agreement with Balfour Beatty to develop a range of low carbon, graphene-infused, 3D-printable mortars suitable for civil construction

• Versarien report the signing of an agreement with Balfour Beatty to develop a range of low carbon, graphene-infused, 3D-printable mortars for civil construction.
• Under the agreement Versarien will look to develop innovative, sustainable, and cost-effective 3D-printable mortars suitable for civil construction
• The team will also look to set up a robust UK-based supply chain to demonstrate their efficacy in real-world applications.
• Versarien will formulate three types of mortar: one based on local materials, and two enhanced with Versarien’s CementeneTM graphene admixture.
• Management will focus on establishing a “UK-based supply chain, identify local suppliers, integrating the graphene admixture, implementing quality control protocols, and creating distribution channels and sales frameworks for both domestic and international markets.”
  • “The project will involve demonstrating the application of these mortars in real-world scenarios within Balfour Beatty’s Highways business, and assessing their performance, durability, and cost-effectiveness compared to traditional construction materials.  It will also evaluate the viability of 3D printed construction methods, considering aspects like cost, time efficiency and sustainability.”
• Versarien will collaborate with various bodies to “propose changes to design codes, ensure certification of products and address any regulatory hurdles throughout the project lifecycle.”
• The Versarien team is already working with Balfor Beatty in the National Highways Roads Research Alliance and the Digital Roads of the Future project.

Conclusion:  The development and application of graphene products into building materials offers the potential to open up a very substantial market for Versarien. We believe Versarien’s CementeneTM graphene admixture should benefit the construction process while improving the weathering and strength of construction where it is used.

*SP Angel acts as Nomad and Broker to Versarien

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                                                            

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35-39 Maddox Street London

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

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

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