SP Angel Morning View -Today’s Market View, Tuesday 20th June 2023

China cuts rates to support waning growth momentum

MiFID II exempt information – see disclaimer below

Anglo Asian Mining* (AAZ LN) – BUY, target 204p – Updated investor presentation

Aura Energy* (AURA LN) – Successful share purchase plan leaves Aura well-funded with A$10.7m

Atlantic Lithium* (ALL LN) – Assay results from new and ongoing drilling support scale of Ewoyaa resource

Celsius Resources* (CLA LN) – Additional exploration licence close to the MCB Project

Conroy Gold and Natural Resources (CGNR LN) – £400,000 fund-raising

Constellium (CSTM N) – Constellium and Tarmac Aerosave joint venture in partnership to partner to recycle aluminium from old aircraft

Golden Metal Resources (GMET LN) – Geophysical data identifies additional tungsten exploration targets at Pilot Mountain, Nevada

Sovereign Metals (SVML LN) – Bulk sampling begins on the Kasiya rutile, graphite project in Malawi

ZCCM / Mopani Copper Mines potential buyers shortlisted to four amid improving appetite for Zambian copper, Reuters

• Reuters reports a list of 10 potential suitors for Zambia’s Mopani Copper Mines has been trimmed down to four.
• The names are reportedly Zijin Mining, Sibanye Stillwater, Norinco Group and a syndicate of ex-Glencore traders.
• Mopani has the potential to produce 225kt pa of Cu.
• Glencore had previously sold a 73% stake in the project to Zambia’s state-backed miner ZCCM-IH in 2021 for $1.5bn, with offtake rights retained.
• Glencore provided additional funding via loan advances to Mopani last year.
• Froneman, Sibanye’s CEO, stated that the company is ‘wiling to invest,’ emphasising they are ‘willing to be there for the long term.’

Gold – $1,953/oz – Prices steady as traders await Powell’s testimony and Chinese buying cools

• Gold prices are trading rangebound in anticipation of Powell’s testimony to congress tomorrow and Thursday.
• Further guidance on the US rate outlook from the Fed chair should provide some direction to US Treasuries, which have been weakening following a repricing of at least one more 25bp rate hike this year.
• The dollar has fallen against a strengthening Euro and Pound, providing some support to gold prices.
• ETFs slashed gold holdings for the 15^th straight day as algorithmic funds rotated into US Treasuries on higher yields.
• Gold ETFs have seen physical holdings slide 0.2% this year, despite a c.7% rise.
• Keep an eye on the Yen, where sustained weakness since March raises the prospect of intervention, potentially stimulating another bullion rally as seen in October 2022.
• China gold buying is thought to be slowing, with retail sales jumping 24% yoy in May to $3.7bn vs jumps of 44% and 37% in March and April respectively. (Bloomberg)
• China gold premiums have weakened from $44.2/oz in March to a discount currently, suggesting weak domestic demand.
• Switzerland saw exports of bullion rise 34% in May as Indian demand rose four times. Sales to the US fell 70% and sales to China fell 13%. Swiss gold imports climbed 58%.

China to introduce new support measures for NEVs?

• China’s State Council Information Office will hold a briefing at 10am Beijing time on Wednesday, June 21, to introduce the promotion of “high-quality development” of the NEV industry.
• China’s current policy to support the NEV industry is mainly through the exemption of purchase tax – a policy originally set to expire in 2017, that has been renewed regularly and will now finish in at the end of 2023.
• A Bloomberg report published earlier this month revealed China was considering extending the tax exemption for NEVs for another 4 years.
• It is widely expected that tomorrow’s announcement will include the extension of the tax exemption, but no further details as to whether there will be any further policies.

CATL heads $1.4bn Chinese investment into Bolivian lithium processing plants

• CATL is heading a consortium of Chinese backers into a $1.4bn lithium investment in Boliva.
• The syndicate will build two plants for a combined production capacity of 200kt pa LCE.
• One plant will be built at Uyuni and one at Coipasa, in the west.
• CMOC Group and Guangdong Brunp Recycling are also involved.
• The plants will be built alongside state miner Yacimientos del Litio Bolivianos.

Amman Mineral IPO – Copper miner Amman Mineral raises $715m in Jakarta IPO

• Reuters reports Amman Mineral Internasional has raised $715m in IPO financing on the Indonesian Stock Market.
• The proceeds are set to be used to pay down debt and fund projects including a smelter on Sumbawa island.
• The smelter has a capacity of 220kt Cu cathode pa and will cost $983m in total capex requirements.
• Shares are set to list on July 5^th.
• The listing follows the IPO of Harita Nickel in April.

Specialty chemicals company LANXESS misses earnings on weak construction and electronics demand

• Lanxess missed earnings expectations and slashes forward guidance on ‘generally very weak demand.’
• Lanxess produces chemical intermediates, additives and specialty chemicals.
• The chemicals company noted particular weakness in the ‘construction industry, electro/electronics industry and even from usually stable consumer related products.’
• EBITDA forecasts for FY 2023 slashed from EUR850-950m to EUR600-650m.

IGTV:  https://www.ig.com/uk/market-insight-articles/ev-metals-to-regain-momentum–despite-economic-uncertainty–sp-a-230606

VOX Markets Podcast:   https://audioboom.com/posts/8318505-taking-stock-featuring-russ-mould-on-ipo-s-john-meyer-on-resource-co-s

                                          https://audioboom.com/posts/8310999-john-meyer-on-china-s-mixed-manufacturing-figures-plus-atlantic-lithium-goldstone-res-anglo-asi

• *SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts. We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate.

Economics

China – Monetary authorities cut key lending rates by 10bp , largely in line with expectations, for the first time since Aug/22 in a move to support ailing growth momentum.

• One- and five-year loan price rates were reduced to 3.55% and 4.20%, respectively, from 3.65% and 4.30%.
• The move was largely expected after the PBOC cut its medium-term lending facility rate by 10bp last week.
• Although, markets were hoping for a larger cut (15bp) in a five-year loan rate which is used in pricing mortgages.

Blinken met with China’s Foreign Minister Qin Gang for a five-hour session.

• President Xi also met with Blinken which perhaps indicates there are some serious issues to resolve such as:
  • US sanctions on China, particularly over semiconductors
  • The Chinese position on Ukraine and China’s trade with Russia
  • Russia if humiliated by Ukraine
  • China’s troubling local debt levels
  • US concerns over Taiwan
• China and the US generally
• We wonder if part of the Feds recent passive aggression on interest rates and move to drive sales lower is also designed to weaken US demand for imported Chinese products.
• If Ukraine succeeds in pushing Russia out of Ukraine and turning its offensive into an outright rout then how will China react?

UK – The economy may slid into a recession and contract 0.3% this year and 1.4% in 2024 if benchmark rates reach 6%, inhouse Bloomberg Economics estimates suggest.

• 2-year rates hit nearly 5.09% yesterday the highest level since mid-2008 as investors shunned debt amid continuing inflationary pressures in the economy.
• Markets are pricing in BOE rate to hit more than 5.8% by January next year from current 4.5%.
• The BOE meeting is due this Thursday with estimates for a 25bp hike.

North Sea +4^oC water temperature ‘marine heatwave’ rise seen in the North Sea

• Climate change blamed for potentially record-breaking warmth off east coast of Britain with threat to sea life (The Times).
• The US National Oceanic and Atmospheric Administration (NOAA) has declared parts of the North Sea to be under a category four marine heatwave, classed as extreme.
• Usually, a heatwave is declared at 1-2^oC above normal,

Australia – The A$ pulled back after the latest monetary policy minutes showed that an unexpected rate hike decision was a “finely balanced” call.

• “The recent data suggested that inflation risks had shifted somewhat to the upside,” minutes read.
• “Given this shift and the already drawn-out return of inflation to target, the board judged that a further increase in interest rates was warranted.”
• Although, minutes were not considered hawkish overall, and markets are now dialling down expectations for another hike before year end.

DRC – Concerns rise over security situation in Eastern Congo

• A UN annual report on its peacekeeping efforts in the Eastern Congo noted the situation has ‘continued to deteriorate significantly’ this year.
• Over 100 armed militias are reportedly operating in the region, with funding coming primarily from the trafficking of gold, tin and tantalum.
• The report describes the ‘catastrophic deteriorating of the humanitarian crisis.’

Currencies

US$1.0932/eur vs 1.0925/eur yesterday. Yen 141.86/$ vs 141.73/$. SAr 18.169/$ vs 18.247/$.$1.279/gbp vs $1.281/gbp. 0.680/aud vs 0.685/aud. CNY 7.173/$ vs 7.159/$.

Dollar Index 102.48 vs 102.37 yesterday..

Commodity News

Precious metals:

Gold US$1,953/oz vs US$1,965/oz yesterday

   Gold ETFs 93.6moz vs 93.8moz yesterday

Platinum US$975/oz vs US$982/oz yesterday

Palladium US$1,399/oz vs US$1,403/oz yesterday

Silver US$23.93/oz vs US$24.11/oz yesterday

Rhodium US$6,100/oz vs US$6,100/oz yesterday 

Base metals:   

Copper US$ 8,544/t vs US$8,499/t yesterday

Aluminium US$ 2,239/t vs US$2,258/t yesterday

Nickel US$ 22,290/t vs US$22,585/t yesterday

Zinc US$ 2,428/t vs US$2,457/t yesterday

Lead US$ 2,138/t vs US$2,134/t yesterday

Tin US$ 26,950/t vs US$27,225/t yesterday 

Energy:

Oil US$76.4/bbl vs US$75.8/bbl yesterday

• Crude oil prices were broadly unchanged following media reports that Iranian crude production averaged 2.9mb/d and exports 1.5mb/d in May, the highest levels in five years.
• European energy prices moved higher on hot weather, with French nuclear reactor operating levels were reported as increasing from 53% to 57% of capacity w/w from 32 available reactors (from 29) out of 56 units.

Natural Gas US$2.668/mmbtu vs US$2.582/mmbtu yesterday

Uranium UXC US$57.75/lb vs US$57.50/lb yesterday

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$114.4/t vs US$113.0/t

Chinese steel rebar 25mm US$540.2/t vs US$531.3/t

Thermal coal (1st year forward cif ARA) US$116.5/t vs US$113.5/t

Thermal coal swap Australia FOB US$131.0/t vs US$137.0/t

Coking coal swap Australia FOB US$220.0/t vs US$220.0/t

Other:  

Cobalt LME 3m US$29,525/t vs US$29,525/t

NdPr Rare Earth Oxide (China) US$70,027/t vs US$69,945/t

Lithium carbonate 99% (China) US$42,701/t vs US$42,651/t

China Spodumene Li2O 6%min CIF US$4,090/t vs US$4,090/t

Ferro-Manganese European Mn78% min US$1,259/t vs US$1,257/t

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

China Graphite Flake -194 FOB US$740/t vs US$740/t

Europe Vanadium Pentoxide 98% 7.1/lb vs US$7.1/lb

Europe Ferro-Vanadium 80% 31.75/kg vs US$31.75/kg

China Ilmenite Concentrate TiO2 US$308/t vs US$308/t

Spot CO2 Emissions EUA Price US$97.2/t vs US$93.2/t

Brazil Potash CFR Granular Spot US$340.0/t vs US$340.0/t

Battery News

Hyundai to accelerate EV plans

• The South Korean automaker plans to invest $85.4b through to 2032 with around a third of that being allocated to EVs
• During the company’s investor day it also announced that it plans to lift localisation of EV production in the United States, its biggest market, by increasing the share of output from 0.7% to 75% by 2030.
• The carmaker is targeting the sale of 2m EV units annually by 2030 and will aim to achieve a more than 10% profitability rate for EVs in the same year.

Company News

Anglo Asian Mining* (AAZ LN) 97p, Mkt Cap £110m – Updated investor presentation

BUY – 204p

• The Company released an updated presentation ahead of the investors’ meeting at tomorrow’s Proactive One2One Investor Forum.
• A copy of the updated presentation can be found here:
• https://wp-angloasianmining-2020.s3.eu-west-2.amazonaws.com/media/2023/06/Anglo-Asian-Mining-Presentation-June-2023.pdf
• The presentation provides a roadmap and details behind strong organic growth pipeline with production guided to reach >175koz(AuEq)/35ktpa(CueEq) in 2028.
• Growth is supported by developing four new mining operations including two greenfield copper projects (Xarxar and Garadag) expanding Group exposure to copper to (~90%).
• In the near term, the team reiterated start of production at Gilar in Q4/23 with the mine helping to lift production delivering higher grade gold/copper rich ores to Gedabek processing facilities.
• The presentation highlights profitable and dividend paying status of the Company all while offering one of the strongest production growth profiles in the sector with the Group increasing its exposure to copper, the metal with constructive market fundamental and key to meeting net zero environmental goals.

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

Aura Energy* (AURA LN) 10.3p, Mkt Cap £62m – Successful share purchase plan leaves Aura well-funded with A$10.7m

(Aura holds 85% of the Tiris Uranium Project, Mauritania)

• Aura’s Share Purchase Plan has raised A$670,495.
• The plan, announced on 3 May 2023, was participated in by Aura’s Managing Director and CEO David Woodall, alongside non-exec Chair Philip Mitchell and NED, Bryan Dixon.
• The Company has now raised A$10.7m through the SPP and the equity placing.
• Aura will look to utilise the funds to continue developing their flagship Tiris Project in Mauritania.
• The Uranium market is enjoying a sustained period of upward momentum, with U₃O₈ climbing to $57/lb last week.
• Going forward, Aura will look to complete the Front-End-Engineering-Design, approval of a uranium export permit alongside off-take and development financing agreements at Tiris within the second half of 2023.

*SP Angel acts as Nomad and Broker to Aura Energy

Atlantic Lithium* (ALL LN) 32.47p, Mkt Cap £200m – Assay results from new and ongoing drilling support scale of Ewoyaa resource

• Atlantic Lithium have now received assay results for 2,208m of infill RC ‘reverse circulation’ drilling on the Ewoyaa lithium project, at Cape Coast, Ghana.
• Results confirm mineralisation continuity within Ewoyaa South-2 and should convert inferred into indicated resources offering greater confidence in the grade and consistency in the resource. The results should also enable better mine sequencing:
  • GRC0892: 57m at 1.17% Li2O from 45m
  • GRC0899: 54m at 1.14% Li2O from 3m
  • GRC0900: 41m at 1.16% Li2O from 73m
  • GRC0909A: 33m at 1.12% Li2O from 78m
  • GRC0896: 18m at 1.16% Li2O from 80m
  • GRC0908: 19m at 0.93% Li2O from 47m
  • GRC0906: 11m at 1.5% Li2O from 38m
  • GRC0906: 17m at 0.91% Li2O from 54m
  • GRC0908: 10m at 1.53% Li2O from 33m

*0.4% Li2O cut-off and maximum 4m of internal dilution

• 18,500m of infill, extensional and exploration RC drilling has been planned for the 2023 season with GeoDrill operating 24/7 on the work program with a fully automated RC rig.
• We viewed the GeoDrill EDM2000HC rig at work on our recent site visit with the Atlantic geological team recording and filing the RC chippings for assay.
• The rig can also drill diamond drill holes enabling the team to check the structure of the resource and host rock when required.
• The Ewoyaa resource currently stands at 35.3mt grading 1.25% Li2O Ewoyaa JORC (2012)
• The DFS ‘Definitive Feasibility Study’ on track and due end Q2 2023 with the team reported to be hard at work on its preparation.
• Location: Ewoyaa’s location, close to the coast offers relatively short-haul trucking to the port of Takoradi, which is just over 100km from the mine site.
• Mining license approval process: Atlantic is currently waiting for approval of the Mankessim licence consolidation ahead of resubmission of Mining Lease application for the Project.
  • ‘The Company initially submitted its application for the Mining Lease for the Project in October 2022, following the release of the Company’s Pre-Feasibility Study for the Project. In order to facilitate a smoother approvals process and simplified operational structure, the Company was advised by the Minerals Commission Technical Committee to consolidate the Project’s proposed mine and processing plant site (formerly covering the Mankessim and Mankessim South licences) into the single Mankessim licence.’

Conclusion:  Atlantic is making good progress in terms of the Ewoyaa DFS and preparations for building the mine and the DMS ‘Dense Media Seperation’ plant to concentrate spodumene ore.  We believe Ewoyaa should be one of the next new lithium mines into the market.

*SP Angel acts as Nomad to Atlantic Lithium

Celsius Resources* (CLA LN) 1.25p, Mkt Cap £27.6m – Additional exploration licence close to the MCB Project

(Celsius has agreed to sell a 30% economic ownership of MCB copper mine for US$43m implying a valuation of >$143m on consummation of the deal)

Click Link for SP Angel research report PDF note – MCB project NPV@8% US$463m, IRR of 34.3%

• Celsius Resources reports that the Philippines Mines and Geosciences Bureau has confirmed that it has received all the required documents for an Exploration Permit covering the Botilao copper/gold prospect located southwest of Celsius Resources’ MCB project on Luzon, Philippines.
• Now that “all documentary requirements have been satisfied, … the permit issuance … [is expected] … upon the clearance of signatories which is anticipated in the coming weeks”.
• The area was explored by Lepanto Exploration during the 1970s during exploration which established “the presence of copper-gold mineralisation in the area”.
• The new licence area, which covers ~948 hectares lies on “the same northeast structure which is a major control of the porphyry Cu-Au mineralisation in the MCB Project … [and the] … proposed initial two-year exploration work program aims to define the extent and distribution of the observed mineralisation along Botilao Creek”.
• The early-stage exploration is expected to include “semi-detailed geochemical sampling and mapping to generate future targets for possible geophysical surveys and eventual diamond drilling activities”.
• Commenting on the significance of the application for Botilao, Executive Chairman, Julito R Sarmiento, thanked the authorities and said that the “tenement could add significant value and complement the Maalinao-Caigutan-Biyog (“MCB”) Copper-Gold Project, given its location and porphyry Cu-Au mineralisation within the area”.

Conclusion: The experience gained at MCB should give Celsius Resources’ exploration team a head start on appreciating the geological setting of Botilao and guiding the exploration programme while its proximity to MCB should assist in logistics and, in the event of a successful discovery, aid in development.  We look forward to the formal award of the exploration permit and to news of the exploration results as they come in.

*SP Angel acts as broker to Celsius Resources

Conroy Gold and Natural Resources (CGNR LN) 14.75p, Mkt Cap £6.7m – £400,000 fund-raising

• Conroy Gold reports that it is raising £400,000 for its exploration programmes in Ireland and Finland through the issue of ~2.96m shares at a price of 13.5p/share
• Each of the new shares carries a warrant to subscribe for an additional share at a price of 22.5p/share until 13^th June 2026.
• The new shares, which “are subject to lock in provisions … until 13 December 2023” represent around 6% of the enlarged company and we note that the funding is being supported by two existing named shareholders, Mr. Jonathon Swann, who will hold 4.64%, and Mr. Philip Hannigan who will hold 18.72% of the enlarged company.
• Welcoming the fundraising, the Chairman, Prof. Richard Conroy, explained that “Exploration expenditures, over €4.5million in Phase 1 alone, are covered by the Joint Venture Agreement which the Company has in place with Demir Export to explore and develop the district scale gold trend discovered by the Company in Ireland … [but that the company has]… other exploration interests, both in Ireland and in Finland, which are not covered by the Joint Venture and which, for relatively low expenditures, could potentially yield highly interesting results for the Company”.

Constellium (CSTM N) US$16.67, Mkt cap US$2.4bn – Constellium and Tarmac Aerosave joint venture in partnership to partner to recycle aluminium from old aircraft

• Constellium and Tarmac are looking into a range of technologies to recover aluminium from decommissioned aircraft
• Tarmac Aerosave is expert in the breaking up of aircraft while Constellium works on aluminium recycling, alloys and metallurgy
• Tarmac Aerosave is a jv between Airbus, Safran and Suez
• Recycling aluminium requires a fraction of the energy used in the smelting of primary metal along with an approximate 95% reduction in CO2 and other emissions.
• Constellium posted sales of €8.1bn last year as aircraft production took off following substantial fleet retirements during Covid. BA retired its entire fleet of 747s
• Shipments rose 50% in Q1 yoy

Golden Metal Resources (GMET LN) 8.75p, Mkt Cap £7.3m – Geophysical data identifies additional tungsten exploration targets at Pilot Mountain, Nevada

(Power Metal Resources (POW LN) 0.76p, Mkt cap £15m holds 62% of Golden Metal Resources)

1. Following its announcement earlier this month that interpretation of induced polarisation (IP) geophysical information from its wholly-owned Pilot Mountain project located approximately 200km SE of Reno has identified three new exploration targets, Golden Metal Resources reports today that further analysis of the geophysics has now identified a further 2 high priority targets for tungsten exploration.
2. The new, previously undrilled areas, dubbed the Porphyry South and Good Hope West targets bring “the total high-priority target inventory at Pilot Mountain to five:

• • Desert Scheelite Parallel West;
  • Porphyry Depths;
  • Desert Scheelite East;
  • Porphyry South: and
  • Good Hope West”

1. The company says that Porphyry South “represents the most compelling porphyry deposit target identified to date at Pilot Mountain … [as it could] … represent the causative intrusion for the skarn-type mineralisation found across the Project”.
2. “The centre of the Porphyry South target is approximately 600m south of Desert Scheelite and is defined by a resistivity high which starts at around 250m depth and extends towards the depth limit of the survey at 500m depth”.
3. Golden Metal Resources comments that “porphyry deposits can often be much larger than their associated skarns” thereby adding to the resource potential of Pilot Mountain which it “considers … hosts the largest known undeveloped tungsten resource in the USA … [which is] … currently without any domestic primary tungsten production”.
4. The company describes that based on geophysical resistivity evidence the new Good Hope West target, located around 1.4km north of the previously known Desert Scheelite resource, “is strongly coincident with a known Good Hope mineralised lode structure … [with the anomaly extending] … for around 600m to the southwest from Good Hope where it has never been drill tested”.
5. Commending the exploration team for identifying the five new targets, CEO, Oliver Friesen, said that “While the criticality of the in-situ tungsten mineralisation at Pilot Mountain cannot be understated given the current geopolitical climate, it is the exploration upside that we continue to delineate which has us equally as excited”.
6. The existing mineral resources at Pilot Mountain comprise 9.01mt of indicated resources at an average grade of 0.26% tungsten trioxide (WO₃) plus an inferred resource of a further 3.53mt at an average grade of 0.31% WO₃ within the deposits at Desert Scheelite and Garnet.

Conclusion: Tungsten is recognised in many jurisdictions as a ‘Critical Mineral’ and the identification of a total of five previously unrecognised exploration targets at the USA’s largest tungsten deposit provides Golden Metal Resources with an opportunity to expand the resource and potentially to underpin a future mine development.

Sovereign Metals (SVML LN) 22.7p, Mkt Cap £104m – Bulk sampling begins on the Kasiya rutile, graphite project in Malawi

• Sovereign Metals are stepping up production of graphite samples from Kasiya for downstream test work and Li-ion battery product qualification.
• An initial four tonnes of flake graphite pre-concentrate has been produced at Sovereign’s laboratory in Malawi for despatch to SGS Lakefield for further testing.
• Early test work on the quality and shape of the graphite particles indicates Kasiya graphite should be suitable for sale into the Li-ion battery market.
• Sovereign are upgrading their in-country facilities to enable continuous production of bulk samples for marketing.
• Management will now move to market its graphite product to traders and processors.
• The Sovereign team have already secured rutile offtake MOUs with Mitsui and Chemours, a US based titanium technology company and titanium dioxide producer.
• While the mining of co-products is relatively common, it is rare for both products to have such substantial value.
• The ability to extract rutile and graphite almost concurrently at the mine should enable Kasiya to be one of the world’s lowest cost graphite producers.
• The dual extraction of both materials will also cut CO2 and other emissions within the mine.
• Furthermore, the use of hydro-mining with high-pressure hoses, as done at Base Resources’ Kwale mineral sands mine in Kenya, should enable particularly low cost and low CO2 mining. Also, there should be little or no: “Concerns related to graphite mining include the inhalation of graphite and related silica particles during mining and processing, and acid-rock drainage from tailings (USGS 2020).”
• Simple open-cast, hydro-mining resolves these issues and may also serve to preserve graphite flake size and quality enabling better prices for its concentrate.
• Kasiya resource:
  • Indicated: 1.2bnt grading of 1% rutile and 1.5% graphite
  • Inferred: 0.6bnt grading 0.9% rutile and 1.1% graphite
• Critical mineral: Graphite is considered to be an increasingly critical mineral due to its use in Li-ion and other battery chemistries where graphite is used as the main anode material.
• The US has not mined graphite since the 1950s, where it is now seen as a critical mineral, due to the small size of deposits and their relatively poor grade.
• According to a recent Pentagon, National Defense Stockpile Requirements Report, natural flake graphite is on a watch list of shortfall materials based on modelling against specific conflict scenarios which indicate a potential graphite shortfall of more than 82,000t.
• The US DLA ‘Defense Logistics Stockpile’ was mandated in November to acquire up to 900t of graphite for stockpiles this year.
• Japan and the EU now also consider graphite to be a critical mineral.
• The IEA, ‘International Energy Agency’ reckon that predicted that the electric mobility and low-carbon energy will consume 25 times more graphite by 2040 each year.
• Pricing: Prices for synthetic graphite vary from $7,7000-8,800/t on Reuters or even $7,000- 20,000/t for CSPG ‘Coated Spherical Graphite’ according to various sources including Anzaplan and Westwater Resources. Coating is done by chemical vapor deposition to create a smooth surface.
• There are three main coated spherical graphite specifications, which differentiate between grid storage, EVs and hybrid vehicles/consumer electronics with prices varying according to specification.

Conclusion: The Kasiya deposit offers battery manufacturers potential to acquire some of the cleanest and lowest CO2 emission-sourced graphite in the world.  We look forward to further news on the technical properties of the graphite.

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%