SP Angel Morning View -Today’s Market View, Tuesday 24th December 2024

Gold holds firm as US Treasury yields soar higher, lifting dollar and weighing on emerging markets 

MiFID II exempt information – see disclaimer below

Asiamet Resources (ARS LN) – Further CAPEX reduction for BKM Project

Atlas Metals Group (AMG LN) – Termination of Agreement for Purchase of Managem Mine

Power Metal Resources* (POW LN) – Update on GSA Environmental agreement

St Barbara Ltd (SBM AU) – A$210m fine from Papa New Guinea Internal Revenue Commission

Gold holds firm as US Treasury yields soar higher, lifting dollar and weighing on emerging markets

• Gold prices are hovering around $2,615/oz, bouncing yesterday off the $2,630/oz mark but staying above the $2,600/oz mark.
• The 10 year shot up again yesterday, rising to 4.6%, and lifting the dollar again.
• The dollar index has now risen 8.2% from September lows, when the Fed flipped dovish amid an August employment scare.
• The Fed has since flipped hawkish over inflationary concerns, with the market slashing expected rate cut expectations.
• Western ETFs have sold gold holdings amid higher US Treasury yields.
• We suspect Chinese buyers are looking to diversify as the dollar strength continues to push the Yuan lower, now rising above 7.3 to November 2023 levels.

Copper 2025 – More of the same or deficits to appear?

• Copper has had a volatile 2024, rising from February lows of $8,200/t to touch $11,000/t in May on a short-squeeze triggered in the US.
• It staged another rally in October, back over $10,000/t on hopes of China stimulus measures before grinding lower to today’s level just under the $9,000/t mark.
• We expect China to continue to be of primary focus, as their property market continues to contract following years of leverage-fuelled over-expansion.
• It is likely that a China-US trade war will be a primary theme of 2025, as Trump looks to satisfy election pledges.
• We note that copper rallied c.$1,500/t, up 25% in the first year of Trump’s previous term, supported by the dollar, which fell over 10%.
• However, this may have been a factor of a widespread surge in global growth, a factor that may be absent in 2025 following an historically aggressive rate hiking cycle triggered in 2022.
• China’s recent smelter expansion will also likely be a key theme in 2025, with TCRCs sitting at recent lows of c.$21/t as per recent contract agreements.
• Thin margins may trigger shutdowns in China’s smelter complex, reducing concentrate demand but also reducing refined metal supply.
• However, there have been recent signs of uptick in China’s copper midstream operating rates, as producers ramp up on sliding inventory concerns.
• There have been positive stirrings from Panama’s new administration over the potential for Cobre Panama to come back online, which would likely weigh on current market balances.
• However, recent polls suggest much of the Country are against First Quantum resuming operations in country.
• Additionally, Ivanhoe’s Kamoa, Rio’s Oyu Tolgoi and Teck’s QB2 will bring some balance to sliding supply from Chile and Peru, as BHP and Codelco ramp up CAPEX to sustain current production levels struggling from grade decline and water access.
• Demand is expected to continue steadily from China’s grid spending and the energy transition; however Europe’s sluggish economic growth may potentially offset the Asian growth drivers.
• Datacentre demand is expected to provide an additional growth driver for copper, with forecasts suggesting up to 5mt of additional copper required by 2030.
• The dollar poses a risk to copper; however, we would be surprised if US Treasury yields sustained their lofty levels here given signs of a slowing US labour market and risks posed to the US property sector.

Economics

Currencies

US$1.0395/eur vs 1.0410/eur previous. Yen 157.06/$ vs 156.55/$. SAr 18.590/$ vs 18.383/$. $1.253/gbp vs $1.257/gbp. 0.624/aud vs 0.625/aud. CNY 7.302/$ vs 7.299/$.

Dollar Index 108.14 vs 107.92 previous

Precious Metals

Gold US$2,615/oz vs US$2,630/oz previous

Gold ETFs 82.6moz vs 82.6moz previous

Platinum US$954/oz vs US$938/oz previous

Palladium US$950/oz vs US$923/oz previous

Silver US$30.2/oz vs US$29.7/oz previous

Rhodium US$4,575/oz vs US$4,575/oz previous

Base metals:   

Copper US$8,977/t vs US$8,955/t previous

Aluminium US$2,564/t vs US$2,542/t previous

Nickel US$15,867/t vs US$15,495/t previous

Zinc US$3,038/t vs US$3,001/t previous

Lead US$1,986/t vs US$2,001/t previous

Tin US$28,542/t vs US$29,050/t previous

Energy:           

Oil US$72.8/bbl vs US$73.1/bbl previous

Natural Gas €44.1/MWh vs €44.4/MWh previous

Uranium Futures $72.8/lb vs $73.8/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$104.0/t vs US$103.9/t

Chinese steel rebar 25mm US$487.6/t vs US$487.2/t

HCC FOB Australia US$203.0/t vs US$204.0/t

Thermal coal swap Australia FOB US$127.0/t vs US$128.3/t

Other:  

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

NdPr Rare Earth Oxide (China) US$53,776/t vs US$54,323/t

Lithium carbonate 99% (China) US$9,933/t vs US$9,933/t

China Spodumene Li2O 6%min CIF US$790/t vs US$790/t

Ferro-Manganese European Mn78% min US$985/t vs US$985/t

China Tungsten APT 88.5% FOB US$338/mtu vs US$338/mtu

China Graphite Flake -194 FOB US$435/t vs US$440/t

Europe Vanadium Pentoxide 98% US$5.0/lb vs US$5.0/lb

Europe Ferro-Vanadium 80% US$26.3/kg vs US$26.3/kg

China Ilmenite Concentrate TiO2 US$294/t vs US$294/t

China Rutile Concentrate 95% TiO2 US$1,089/t vs US$1,089/t

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

Brazil Potash CFR Granular Spot US$295.0/t vs US$292.5/t

Germanium China 99.99% US$2,725.0/kg vs US$2,725.0/kg

China Gallium 99.99% US$415.0/kg vs US$420.0/kg

Battery News

CATL plans EV battery swapping expansion

• The world’s largest battery maker announced last week that it has plans to get into battery swapping in China ‘in a big way’, next year.
• CATL announced plans to open 1,000 swap stations next year in China, including in Hong Kong and Macao, with a long-term goal of 10,000 stations.
• Battery swapping faces hurdles in the standardisation of the battery pack so the swap stations can handle it, and most EVs have their own configuration.
• CATL is therefore looking at partnerships with automakers to standardise future EV batteries.

First silicone anode battery will provide 186mi range and five-minute charging

• Battery maker ProLogium unveiled their silicone anode battery at the Paris Motor Show back in October.
• The silicone battery has a higher energy density than commonly-used lithium-ion or lithium iron phosphate batteries.
• ProLogium’s battery has been certified by TUV Rhineland at 321Wh/kg – existing technologies offer under 200Wh/kg in the case of LFP or 200 to 300 Wh/kg from Li-ion.
• The battery maker expect that ongoing development will see its silicon anode batteries offer up to 77% higher energy densities by the end of 2024.

Company News

Asiamet Resources (ARS LN) – 0.8p, mkt cap £22m – Further CAPEX reduction for BKM Project

• Asiamet reports a US$58m reduction in CAPEX estimate for BKM.
• Total pre-production CAPEX now expected at US$177m.
• The estimate includes a US$22m contingency.
• Project now targets copper cathode production of 10-11ktpa vs previous targets of 17-18ktpa.
• A revised mine plan will see ore processed at 28.9mt, with a strip ratio of 0.72, over LOM of 13.3 years.
• Company expects to deliver an updated feasibility study in early 2025.

Atlas Metals Group (AMG LN) 11.5p, Mkt Cap £4.2m – Termination of Agreement for Purchase of Managem Mine

• Atlas, previously MetalsNRG, provides an update on their Sale and Purchase Agreement for CMO from Managem.
• The Company had aimed to raise up to £15m via a placing in connection with the Acquisition.
• Company reports that this was not possible within the timeframe ‘in light of feedback from prospective institutional investors in connection with the Placing and market conditions.’
• As a result of the failed equity placing, Orion’s OMF Fund has issued a default notice over the undrawn US$25m convertible loan note.
• No funds have been drawn under the CLN.
• Atlas is now exploring alternative options to close the acquisition.

Power Metal Resources* (POW LN) 13.5p, Mkt cap £15.4m – Update on GSA Environmental agreement

• Power Metal Resources provides an update on its ongoing Agreement with GSA.
• GSA Environmental has entered a commercial agreement with Flyash Metal Recovery.
• Under their agreement, POW has now issued 534k new shares at an issue price of £0.14, relating to a $75k payable.
• GSAe provides engineering technology and has 25 years of project experience in industrial waste.
• POW and GSAe’s February 2024 agreement sees POW pay GSAe £75k in shares following a commercial agreement with a third party.
• POW has also advised ACAM that it will pay the first interest payment on the Loan Notes via £100k worth of shares issued at £0.142/share.
• Total new ordinary shares issued today are 1.3m, with total existing shares currently 114.3m.

*SP Angel acts as Nomad and Broker for Power Metal Resources

St Barbara Ltd (SBM AU) A$0.2, Mkt cap A$181m – A$210m fine from Papa New Guinea Internal Revenue Commission

• St Barara reports it has received correspondence from the Papa New Guinea Internal Revenue Commission over the Simberi tax assessment.
• The Authorities have imposed a 200% penalty imposition of A$210m, relating to the calculation of CAPEX asset values sincr 2006, and depreciation deduction claims between 2017 and 2021.
• A penalty has been imposed over the re-capitalisation of Simberi Gold in 2018.
• Company intends to appeal by 17^th February 2025.

 LSE Group Starmine awards for Q3 commodity forecasting:

No.1 in Precious Metals: SP Angel mining team awarded No 1. ranking for Previous Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q3 2024

No.2 in Base Metals: SP Angel mining team awarded No 2. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q3 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

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

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

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