SP Angel Morning View -Today’s Market View, Tuesday 22nd April 2025

Gold hits $3,501/oz as Trump shakes markets and Chinese pension funds buy gold

MiFID II exempt information – see disclaimer below

East Star Resources (EST LN) – 2024 results highlight exploration progress in Kazakhstan

Kavango Resources* (KAV LN) – Local investor support for Hillside project, Zimbabwe

Lumina Gold Corp (LUM CN) – Cash offer from CMOC for C$581m

Mako Mining (MKA CN) – Production results from Nicaragua

Mkango Resources* (MKA LN) – BUY – EPCM contract awarded for the HyProMag USA RE magnet recycling facility

Savannah Resources* (SAV LN) – BUY, 18.1p – Local investor takes its stake to ~10%

Gold hits $3,501/oz as Trump shakes markets and Chinese pension funds buy gold

• Gold rose >$200/oz over the past week, jumping again over the long weekend.
• News that China has ordered its 10 largest pension funds to invest 1% of their assets in gold indicates further substantial buying
• One report suggests this could take up 30% of gold supply.
• Trump’s continued berating of Fed Chair Powell has raised concerns over his approach to the Fed’s independence going forward.
• Trump’s undermining of central-bank independence is likely further weakening confidence in the dollar and US government bonds.
• Additionally, the President stated on Sunday ‘the golden rule of negotiating and success: he who has the gold makes the rules.’
• Spot gold bounced hit $3,501/z overnight, after Monday saw equities slide, with the Nasdaq down 3%, alongside bonds, with the US 10 year yield rising over 4.4% again.
• The dollar index has fallen below 100, hit by strength in both the Japanese Yen and the Euro as traders rotate out of the US.
• Investors appear to be shunning Treasuries and the dollar and buying gold over concerns of Trump’s erratic approach to governance and inflation impacts from tariffs.
• ETF holdings continue to rise, up to 89.5moz today, but again remains well off 2020 and 2022 levels.
• Meanwhile China is digging its heels in against Trump, warning other countries not to act against Beijing with their trade deals with the US.

Copper ($9,300/t) pushes higher as China ramps up output on better smelter margins

• Copper prices are rising, climbing back to $9,300/t, supported by a weaker US dollar and signs of green shoots in China demand.
• Refined copper production rose 8.6% in March yoy to 1.25mt, higher than December 2024, the previous record output month.
• This may be a result of improved margins from higher by-product gold revenues and sulphuric acid received by smelters.
• Smelters have been hit by rock-bottom TCRC fees, triggered by a mass capacity rollout in China and Indonesia.
• Alternatively, smelters may be ramping up output on expectations of improving demand fundamentals from the China property market.

Trianon Limited (Private) – VEB to invest US$13.4bn in Baimskaya copper mine to raise national copper production by 25% (Reuters).

• Kaz Minerals completed a feasibility study on the project in 2021 highlighting:
  • Average annual copper production of 300ktpa over 20+ years
  • LOM copper grade of 0.47%
  • 490kozpa gold production at 0.27g/t Au
  • Ore processing capacity of 70mpta and US$8.5bn in CAPEX.
  • The project requires a 430km all-weather road to a new port on the Northern Sea Route

ERG – US$5bn offer for ERG by US investor, James Cameron

• Dr Alexander Machkevitch, director and founder of ERG passed away on 22^nd March appears to have been a catalyst for the bid.
• ERG was taken private for US$4.5bn in 2013 following an investigation by the SFO in the UK for suspected fraud, bribery and corruption in its African and Kazak operations.
• The SFO later closed its investigation in 2023 and agreed a rare settlement in 2024.
• The group is 40% owned by the Kazakh government
• ERG is a significant producer of copper, cobalt, aluminum,and iron that is 40% owned by the Kazakh government
• We understand ERG is looking into the development of Rare Earth production in Kazakhstan.

Economics

US – Equity indices are trading slightly higher this morning following a sell off on Monday amid increased criticism of the Fed policy by President Trump.

• President Trump warned that the economy may slowdown “unless Mr. Too Late, a major loser, lowers interest rates, NOW”.
• The US$ is trading at a three year low with 10y yields trading at 4.4%, up on 3.6% lows recorded briefly after the Liberation Day reciprocal tariffs announcement in early April.
• The yen is approaching the 140 level while the franc is trading at its highest in years as investors are seeking safe have assets outside of the US.
• Gold is hitting new all time highs.

US debt due for refinancing

• 12:months – $7.6tn (~31%) of US public debt falls due including a large amount of interest-bearing debt that will mature within a year.
• 18 months – $9.2tn – will need to be refinanced
• 48 months – $28tn – to be refinanced over next 4 years
• US national debt >$36tn
• Trump is looking at the refinancing of $28tn of debt.
• In theory the Fed is due to support Trump but we detect an element of friction between Doland and Fed Chairman, Jerome Powell.
• The cost of supporting the interest bill on this debt is huge.
• High US interest rates are required to make the debt look attractive but high rates hurt the economy and will lose votes.
• Trump is used to debt negotiation in property, now his challenge is to rescue the US Administration and economy.
• The Fed is mindful of the potential for Stagflation caused by the sudden imposition of substantial Tariffs
• Inflation from tariffs and their disruptive impact is a concern.
• Cutting interest rates could also spark inflation. If this happens as the economy stalls we could see Stagflation.
• Most economists lean politically to the left, eg more spending = more growth but reality kicks in when market’s won’t give you any more money.
• Reports of coordinated selling of US Treasuries by Canada, Europe and others has exacerbated the challenge of refinancing of US debt.
• Presidents like to throw funds at the economy but if there are insufficient buyers for US treasuries Trump may be limited unless Tariff fees are able to fill the gap.
• Unfortunately, Trump’s proposed tariffs against China are so high that its hard to see much trade at these levels.
• Tariffs will need to find a balance whereby they enable sufficient trade and therefore funding for Trump while not crashing the economy or creating stagflation.
• The UK and Europe have much higher VAT rates which provide government funds indicating that Trump could impose Tariffs to at least these levels without too much trouble.
• VAT rates were gradually raised in many economies causing less disruption than Trump’s rather sudden Tariff demands.

Conclusion: Trump will roll back on his tariff demands for most nations to restore confidence and avert more of a crisis.

We suspect there will be a tougher negotiation with China but the Chinese are pragmatic, and it makes sense to both sides to agree a deal than to have an all-out trade war.

Ukraine/Russia – Military operations resume post the 30h “Easter ceasefire”, although, both sides reported violations of the temporary pause with attacks recorded over the weekend.

• US representatives will meet with their Ukrainian and European counterparts this week in London to discuss a peace deal. (Bloomberg)
• US Secretary of State Marco Rubio and Trump’s special envoys Steve Witkoff and Keith Kellogg are expected to meet with the foreign ministers and national security advisers from France, Germany, the UK and Ukraine.
• Potential resolution may see Russia retaining control of currently occupied territories with Ukraine dropping plans for potential NATO membership with some security guarantees offered to Kyiv in return, according to people familiar with the negotiations.
• Earlier, President Trump said that there was “a very good chance” that Ukraine and Russia can reach a deal this week.

Currencies

US$1.1506/eur vs 1.1371/eur previous. Yen 140.30/$ vs 142.69/$. SAr 18.661/$ vs 18.863/$. $1.340/gbp vs $1.324/gbp. 0.642/aud vs 0.635/aud. CNY 7.312/$ vs 7.301/$.

Dollar Index 98.344 vs 99.577 previous.

Precious metals:         

Gold US$3,469/oz vs US$3,324/oz previous

Gold ETFs 89.5moz vs 89.3moz previous

Platinum US$973/oz vs US$965/oz previous

Palladium US$945/oz vs US$954/oz previous

Silver US$32.4/oz vs US$32.5/oz previous

Rhodium US$5,400/oz vs US$5,425/oz previous

Base metals:   

Copper US$9,299/t vs US$9,174/t previous

Aluminium US$2,374/t vs US$2,385/t previous

Nickel US$15,660/t vs US$15,745/t previous

Zinc US$2,582/t vs US$2,590/t previous

Lead US$1,931/t vs US$1,906/t previous

Tin US$31,125/t vs US$31,220/t previous

Energy:           

Oil US$66.9/bbl vs US$66.3/bbl previous

Henry Hub Gas US$3.04/mmBtu vs US$3.27/mmBtu last Thursday

• Energy markets edged higher over the Easter weekend as President Trump stepped up his criticism of Federal Reserve Chairman Jerome Powell in response to his policy stance that US tariffs will lead to monetary inflation.
• The US Baker Hughes rig count was up 2 to 585 units last week (-34 or 5% y/y), with oil rigs up 1 to 481 units (-30 y/y) and gas rigs up 1 to 98 units (-8 y/y), as the Utica gained 2 rigs to 13 units (+2 y/y).
• US Henry Hub natural gas fell as the EIA reported a 16bcf w/w build to 1,846bcf, with storage inventories now 20.6% below last year and 3.9% below the 5-year average.
• Lhyfe will receive a government grant up to a maximum amount of €149m over the next four years as part of the French National Hydrogen Strategy (SNH II) to construct the Green Horizon project, which has planned capacity of 34 tonnes of green hydrogen per day by 2029 near the Grand Canal du Havre (Normandy).

Natural Gas €35.5/MWh vs €35.7/MWh previous

Uranium Futures $65.2/lb vs $65.1/lb previous

Bulk:   

Iron Ore 62% Fe Spot (China CFR) US$99.8/t vs US$99.5/t

Chinese steel rebar 25mm US$444.1/t vs US$465.9/t

HCC FOB Australia US$180.0/t vs US$182.5/t

Thermal coal swap Australia FOB US$96.8/t vs US$98.0/t

Other:  

Cobalt LME 3m US$33,700/t vs US$33,700/t

NdPr Rare Earth Oxide (China) US$56,897/t vs US$58,353/t

Lithium carbonate 99% (China) US$9,300/t vs US$9,547/t

China Spodumene Li2O 6%min CIF US$800/t vs US$800/t

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

China Tungsten APT 88.5% FOB US$358/mtu vs US$358/mtu

China Graphite Flake -194 FOB US$430/t vs US$430/t

Europe Vanadium Pentoxide 98% US$5.1/lb vs US$5.1/lb

Europe Ferro-Vanadium 80% US$24.2/kg vs US$24.1/kg

China Ilmenite Concentrate TiO2 US$284/t vs US$284/t

Global Rutile Spot Concentrate 95% TiO2 US$1,513/t vs US$1,513/t

Spot CO2 Emissions EUA Price US$65.1/t vs US$65.1/t

Brazil Potash CFR Granular Spot US$355.0/t vs US$350.0/t

Germanium China 99.99% US$2,825.0/kg vs US$2,825.0/kg

China Gallium 99.99% US$390.0/kg vs US$390.0/kg

Battery News

CATL announces new batteries at Shanghai show

• Leading battery maker CATL unveiled its second generation Shenxing fast-charging battery at its Tech Day event held in Shanghai.
• According to the companies Chief Technology Officer, the new-gen Shenxing battery can deliver a driving range of 520km from a five-minute charge.
• A few weeks ago competitor BYD unveiled its battery that charged 400km of range in that time.
• CATL’s battery can also be charged from 0% to 80% in 15 minutes.
• CATL expects this new battery to be in 67 vehicle models by the end of 2025.
• Alongside the new Shenxing battery, CATL announced its sodium-ion battery, Naxtra, was ready for commercialisation.
• The Naxtra battery has an energy density of 175Wh/kg and could provide EVs with up to 500km range.
• The development signals CATL’s broader commitment to diversifying its battery technology offerings and exploring alternatives to traditional lithium-ion batteries, which could potentially help reduce costs and alleviate supply chain concerns.

Nio delays European launch of Firefly EV

• Chinese EV maker Nio has announced it has delayed the European launch of its Firefly EV to Q3 2025.
• The company cited struggles with sales and service network expansion in the region.
• The Firefly brand was unveiled as a rival product to Mercedes-Benz’s Smart and BMW’s Mini brands and was expected to launch in H1 2025.

Company News

East Star Resources (EST LN) 1.1p, Mkt Cap £4.4m – 2024 results highlight exploration progress in Kazakhstan

• In its results for the year to 31^st December 2024, the Kazakhstan focussed exploration company, East Star Resources, reports a pre-tax loss of £1.1m and a closing cash balance of ~£0.7m following a £1.16m fundraising in October 2024.
• Commenting on the operational achievements of the year, the company highlights the publication of a maiden ‘Inferred’ resource of 20.3mt at an average grade of 1.16% copper, 1.54% zinc and 0.27% lead for its Verkhuba copper project in the East Region of Kazakhstan.
• East Star Resources confirms the start of an induced polarisation geophysical survey aimed at identifying “providing drill targets for new discoveries below and adjacent to known deposits” at Verkhuba as well as additional drilling.
• East Star Resources was awarded an initial “two copper porphyry exploration licences … [where it has ] … collected 2,800 soil samples and conducted spectral analysis, leading to the identification on the Snowy Licence of a copper porphyry target and a compelling epithermal gold target” within the Balkash-Ili volcanic arc which is considered a porphyry copper and epithermal gold target.
• Backed by BHP’s Xplor programme, follow-up geophysical exploration is planned within the Balkash-Ili targets.
• The company explains that it has identified a “copper-molybdenum anomaly in the western portion of the licence is prospective for a porphyry copper target, while another target is around 4km long by 1km wide and displays anomalous gold (up to 0.28g/t) and silver (up to 7.2g/t) as well as arsenic, molybdenum and weak mercury in soils … consistent with the nearby artisanal workings”.
• The company has also formed a “joint venture with Getech Group Plc (AIM: GTC), a world-leading locator of subsurface resources, to explore for sediment-hosted copper deposits in Kazakhstan at no upfront cost to East Star”.
• Non-Executive Chairman, Sandy Barblett, explained that the “exploration season is approaching. East Star will be drilling new targets and conducting geophysics across multiple licences. 2025 is going to be huge for East Star”.
• The company also welcomes the appointment of Chris van Wijk as a non-executive director in January 2024.  He is described as “an experienced geologist with a wealth of relevant experience, including base metal and gold exploration in Africa, Europe, the Americas, and Australia as well as joint venture management and project evaluation for major mining companies”.

Kavango Resources* (KAV LN) 0.78p, Mkt Cap £24m – Local investor support for Hillside project, Zimbabwe

• Kavango Resources has secured US$5m in the form of a convertible loan note from a “consortium of Zimbabwe registered pension funds”.
• The note, which “is interest free can be drawn down in three tranches by Kavango and is convertible into new ordinary shares in Kavango at a conversion price of the USD equivalent of 1p per share”.
  • The initial, US$0.5m tranche can be “drawn down immediately for mine development in Zimbabwe”;
  • Drawdown of the second US$1.5m tranche occurs “over the next 12 months for the import of mining equipment for Kavango into Zimbabwe” and
  • The final US$3m can be “drawn down over the next 12 months for mine development in Zimbabwe”.
• Chief Executive, Ben Turney, explained that the local pension fund support was an important element of the company’s “strategy in Zimbabwe …to promote local shareholder ownership”.
• He confirmed that the funds would be used for “mine development and construction of our first gold processing plant. Kavango currently aims to bring Prospects 1, 3 and 4 at the Hillside Project into production over the next 12 months, using modern mechanised mining”.
• The pension fund investor, the Comarton Managed Pension Funds Investments Consortium is described as “an influential group of individual pension funds in Zimbabwe that collaborates on investments. Twenty-eight consortium members have the mandate to invest in equities and have indicated their intention to participate in the Kavango investment facility”.

Conclusion: Local investors are supporting Kavango’s Hillside gold development in Zimbabwe with a staged investment of US$5m via a convertible loan-note.

*Two SP Angel Analysts recently visited Kavango’s Hillside mines and licenses in Zimbabwe. An SP Angel analyst holds shares in Kavango

Lumina Gold Corp (LUM CN) C$1.16, Mkt cap C$485m – Cash offer from CMOC for C$581m

• Lumina Gold, who are developing the Cangrejos project in Ecuador, report a cash offer from CMOC.
• The Companies have agreed for CMOC to acquire all outstanding Lumina shares for C$1.27/share in cash, for a fully diluted equity value of c.$581m.
• The offer price represents a 71% premium to the 20-day VWAP.
• Lumina will also enter a US$20m convertible loan note agreement at C$1/share with CMOC at 6% interest maturing April 2026 for funding expenditures.
• The Acquisition will require approval from the TSXV and British Columbia Supreme Court.
• The Cangrejos PFS released 2023 showed:
  • 26 year LOM producing average annual gold of 371koz, or 469kozpa GEO.
  • 30tpd operation, expanding to 60ktpd in year four and 80ktpd in year seven.
  • LOM processed gold grade of 0.55g/t Au and LOM strip ratio of 1:26
  • Development CAPEX at $925m, with expansion capital of $454m and sustaining capex of $598m.
  • AISC net of by-products at $671/oz.
  • Post-tax NPV5 at $1,980/oz of $3.5bn and IRR of 23.1%
• Lumina entered into a $300m streaming agreement with Wheaton Precious Metals in 2023.
• The Company is backed by Ross Beaty.

Mako Mining (MKA CN) C$4.5, Mkt cap C$358m – Production results from Nicaragua

• Mako Mining reports 1Q25 production results from their San Albino gold mine in Nicaragua.
• Company processed 53.6kt at an average grade of 7.1g/t Au with recoveries of 85%. (51.2kt, 8.6g/t Au and 85% recoveries respectively prior quarter)
• Company produced 10.5koz gold over the quarter vs 12koz prior quarter.
• Total gold sales over the quarter at 10.8koz generating US$31.5m in revenue.
• Cash balance of US$14.2m following US$6.5m payment made in relation to the Moss Mine acquisition.

Mkango Resources* (MKA LN) 20p, Mkt Cap £71m – EPCM contract awarded for the HyProMag USA RE magnet recycling facility

BUY

• Mkango and CoTec engaged engineers to complete HyProMag USA EPCM services for the rare earth magnet recycling facility in Dallas-Fort Worth, Texas.
• Two engineering firms were appointed including US-based PegasusTSI and Canada-based BBA USA.
• The detailed engineering design and value engineering phase will review the AACE 3 study completed November 2024 and support the AACE 2 capital cost estimate update.
• Additionally, final site selection is expected to be completed in 1H25 allowing the start of site permitting.
• In parallel, the team will be looking to secure commercial arrangements with potential feed supply and product off-takers to meet ongoing financing obligations.
• Notice to Proceed (NTP) is expected 2H25.
• First production targeted for 1H27.
• The project is envisaged to run at 1,557tpa NdFeB magnet products (750tpa sintered magnets ad 807tpa NdFeB co-products).
• The plant to reach full capacity within five years of commissioning with over a 40y operating life.

Conclusion: HyProMag USA, a CoTec/Maginito JV (Mkango owns a ~40% interest through its 79% stake in Maginito), advances development plans to establish US based facility of manufacturing NdFeB magnets and magnetic products from recycled equipment offering a sustainable domestic source of rare earth containing products in the industry dominated by China. The nation expanded export controls on heavy rare earths and magnets in early April in retaliation to US reciprocal tariffs.

*SP Angel acts as nomad and broker to Mkango Resources

Savannah Resources* (SAV LN) 5.1p, Mkt Cap £113m – Local investor takes its stake to ~10%

BUY – 18.1p

• Grupo Lusiaves bought more shares in the market taking its stake to 10.1%, up from 9.4% reported previously.
• Grupo Lusiaves now hold ~219m shares, an increase of ~13.5m (~£0.7m at current spot price of 5.2p).

*SP Angel acts as Nomad and Broker to Savannah Resources

LSE Group Starmine awards for 2024 commodity forecasting:

No.1 in Precious Metals: SP Angel mining team awarded No 1. ranking for Precious Metals forecasting in LSEG Annual Starmine Award for Reuters Polls 2024

No.2 in Base Metals: SP Angel mining team awarded No 2. ranking for Base Metals forecasting in LSEG Annual Starmine Award for Reuters Polls 2024

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

Arthur Parish – Arthur.Parish@spangel.co.uk – 0203 470 0476

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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