SP Angel Morning View -Today’s Market View, Tuesday 31st October 2023

Base Metals prices pause rally as the market digests China PMIs

MiFID II exempt information – see disclaimer below

Atlantic Lithium* (ALL LN) – Quarterly highlight award of mining license for Ewoyaa lithium project

Aura Energy* (AURA LN) –  Uranium exploration targets offer potential to raise Tiris project to world-class scale

Base Resources (BSE LN) – Quarterly activities report as ilmenite and rutile prices rise

Beowulf Mining* (BEM LN) – Renewal of Kallak exploration licence and China graphite ban update

Celsius Resources* (CLA LN) – Quarterly report confirms progress at the MCB project as well as advances at the Botilao and Sagay exploration projects in the Philippines.

First Quantum Minerals (FM CN) – Legal challenge and calls for a referendum on the Cobre Panama mine

Goldstone Resources* (GRL LN) – Gold loan update

Great Southern Copper (GSCU LN) – Expansion of the Monti Lithium project in Chile

GreenRoc Mining* (GROC LN) – PEA highlights value of Amitsoq graphite mine in Greenland

KEFI Gold and Copper* (KEFI LN) – Q3 operations update

Kore Potash* (KP2 LN) – $2.5m equity raise and CEO resignation

Resolute Mining (RSG LN) – Minor reductions to 2023 production guidance as Syama oxide mine hit by a pocket of carbon rich mineralisation at Tabakoroni

Sovereign Metals* (SVML LN) – Quarterly highlights ramp up in Malawi site operations and ongoing drilling and other Kasiya project studies

Sunrise Resources (SRES LN) – Analysis of historic data from the Reese Ridge zinc/lead/silver project, Nevada

Yellowcake (YCA LN) – Quarterly activities report as uranium prices jump 30%

Copper pares gains on disappointing PMIs as China considers copper curbs

• Copper has eased from yesterday’s rally past $8,200/t, with weak China PMIs weighing on demand optimism.
• Bloomberg reports China is discussing plans to impose curbs on smelter capacity, which has been on a tear in recent months.
• Antaike expects an additional 30% of copper capacity to be added by 2026.
• Copper imports continue to accelerate as China looks for concentrate to feed its hungry smelters.
• A ban by the middle of the decade may offer companies a chance to finish development projects currently in the pipeline.
• Emissions are adding to Beijing’s concerns, with policymakers looking to see peak emissions by 2025.

Lithium equities hit by weakening prices whilst mining majors scoop up deals

• SQM and Albemarle are down 36% and 40% ytd and MinRes has fallen 23% whilst Pilbara is down 32% since August.
• The sell-off reflects a normalisation of lithium prices on near-term demand weakness.
• Semiconductor producers reported a drop in chip demand, wth ON Semiconductor seeing its stock fall 22% yesterday on the back of weak forward guidance.
• Battery maker Panasonic noted weak demand for ‘high end EVs’ as a reason for its $1bn cut to sales guidance.
• Bulge bracket bank analysts cut lithium price forecasts on balancing lithium markets.
• However, the spodumene mining majors are putting their money to work as equity prices sell-off.
• Both Albemarle and SQM looking to acquire hard-rock lithium projects in recent months with their Liontown and Azure deals – despite Gina Rinehart’s efforts to complicate matters.
• Copper giant Codelco splashed out $244m for Lithium Power International whilst MinRes took control of the Bald Hill Mine.
• We are reassured to see those active in the upstream lithium sector taking advantage of the sell-off in equities to take long-term positions in attractive development assets.
• We suggest looking at the Ewoyaa project in Ghana, where Atlantic Lithium* recently secured their key mining lease, alongside the Barroso project in Portugal, where Savannah Resources is progressing a DFS for the 2H24.

*SP Angel acts as Nomad and Broker to Savannah Resources and Nomad to Atlantic Lithium

Economics

China – Manufacturing slipped back into contraction in October while services sector growth unexpectedly slowed down in a sign that the economy remains fragile, Bloomberg reports.

• Official Manufacturing PMI: 49.5 v 50.2 September and 50.2 est.
• Official Services PMI: 50.6 v 51.7 September and 52.0 est.
• Official Composite PMI: 50.7 v 52.0 September

• Evergrande: Hong Kong judge warns it is ‘highly likely’ to wind up Evergrande on 4^th December if a restructuring plan is not available.
• This could be China’s ‘Lehman Bros.’ moment and we know how bad that was for financial markets.
• The National Financial Work Conference starts this week in Beijing. This occurs once every five years and is likely to focus on the restructuring of the property sector and the restructuring of local government debt. There should be some interesting statements to come.

Germany – Inflation slowed more than expected in October in a welcome piece of news for the ECB that kept rates unchanged opting for a wait and see approach on monetary outlook.

• Attention is on core measure that has also been slowing down albeit currently runs at above the headline gauge with the Bundesbank expecting core inflation to continue at above 4% rate in the near future due to pressures in services sector.
• CPI (%mom): -0.2 v 0.2 September and 0.1 est.
• CPI (%yoy): 3.0 v 4.3 September and 3.3 est.

Traders and banks strike deals in Russian metals as taboo fades (Mining.com)

• Mining.com report “traders from Citigroup Inc. to Trafigura Group are increasingly willing to enter new deals for Russian metals, seizing opportunities for profit while competitors hold back.”
• Given the sanctions which remain in place we reckon these banks may be in for a severe regulatory telling off .
• Mining.com goes on to say “The deals show how some traders are navigating the thicket of sanctions and other restrictions on Russia in order to keep its natural resources flowing, amid conflicting messages from western capitals about whether they want companies to handle Russian commodities. At a time when many are struggling to make money in metals trading, deals involving Russian supplies are one of the few areas where it’s possible to make a solid profit, according to the head of one trading house, speaking privately.”
• Maybe someone should remind them of why the sanctions are in place.

Currencies

US$1.0627/eur vs 1.0550/eur previous. Yen 150.36/$ vs 149.63/$. SAr 18.798/$ vs 18.852/$. $1.216/gbp vs $1.209/gbp. 0.636/aud vs 0.635/aud. CNY 7.318/$ vs 7.318/$.

Dollar Index 106.26 vs 106.66 previous.

Commodity News

Precious metals:

Gold US$1,997/oz vs US$1,993/oz previous

Gold ETFs 87.3moz vs 86.6moz previous

Platinum US$937/oz vs US$908/oz previous

Palladium US$1,128/oz vs US$1,122/oz previous

Silver US$23.19/oz vs US$23/oz previous

Rhodium US$4,450/oz vs US$4,450/oz previous

Base metals:

Copper US$ 8,141/t vs US$8,116/t previous

Aluminium US$ 2,261/t vs US$2,240/t previous

Nickel US$ 18,360/t vs US$18,500/t previous

Zinc US$ 2,464/t vs US$2,476/t previous

Lead US$ 2,115/t vs US$2,115/t previous

Tin US$ 24,585/t vs US$25,070/t previous

Energy:

Oil US$88.1/bbl vs US$89.2/bbl previous

• Energy prices edged lower yesterday as little change to the geopolitical landscape in the Middle East allowed the market to switch focus towards poor Chinese economic data.
• Media report BP’s interim CEO Murray Auchincloss comments that not many deals look interesting to the Company right now, with focus instead on counter-cyclical acquisitions.

Natural Gas €48.600/MWh vs €54.000/MWh previous

Uranium UXC US$73.00/lb vs US$69.00/lb previous

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$122.5/t vs US$120.1/t

Chinese steel rebar 25mm US$534.5/t vs US$534.0/t

Thermal coal (1st year forward cif ARA) US$123.8/t vs US$133.0/t

Thermal coal swap Australia FOB US$134.5/t vs US$134.5/t

Coking coal swap Australia FOB US$320.0/t vs US$325.0/t

Other:  

Cobalt LME 3m US$33,420/t vs US$33,420/t

NdPr Rare Earth Oxide (China) US$69,892/t vs US$69,894/t

Lithium carbonate 99% (China) US$21,111/t vs US$21,248/t

China Spodumene Li2O 6%min CIF US$2,010/t vs US$2,010/t

Ferro-Manganese European Mn78% min US$1,026/t vs US$1,018/t

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

China Graphite Flake -194 FOB US$630/t vs US$630/t

Europe Vanadium Pentoxide 98% 6.2/lb vs US$6.2/lb

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

China Ilmenite Concentrate TiO2 US$311/t vs US$311/t

Spot CO2 Emissions EUA Price US$83.3/t vs US$83.2/t

Brazil Potash CFR Granular Spot US$342.5/t vs US$342.5/t

EV / Battery news

CATL puts new battery production base into operation – claims to be able to produce 1 cell per second

• The first phase of CATL’s Guizhou production base has been put into operation with an annual capacity of 30GWh
• CATL claim it can produce a cell in 1 second and a pack in 2.5 minutes.
• CATL is still the world’s largest power battery maker, with a global share of 36.9% in the January-August period.

France reinvests in EV charging infrastructure to meet EU targets

• The French government has announced new funding for the roll-out of EV charging points to match the development pace set by the EU’s new alternative fuel infrastructure regulation.
• France aims to have over 400,000 charging points on its road network by 2030, including 50,000 fast charging points.
• There are currently just over 110,000 charging points, making France the second best-equipped country in Europe, behind the Netherlands.
• According to new EU regulation, a fast-charging station must be installed on main transport corridors every 60km by the end of 2025 and on half of the network for heavy-duty vehicles by the end of 2027.
• An additional €200m between 2024-2027 will be allocated on top of the €320m already allocated for 2016-2023.
• A further €68m for the development of fast and ultra-fast charging stations (with a capacity of more than 50kW) and an increase in the tax credit for home charging points from €300 to €500 per station will also be introduced.

BP Pulse submits $100m order for Tesla ultra-fast chargers

• The order of ultra-fast chargers is for rollout in the US and is the first deployment of Tesla’s chargers on an independent network.
• BP Pulse plans to invest up to $1bn in charging stations across the US by 2030.
• The 250kW BP Pulse-branded chargers will be compatible with both Tesla’s North American Charging Standard (NACS) and the Combined Charging System (CCS) connections.
• As we have seen previously, automakers are moving to adopt Tesla’s NACS, which is seeing Tesla chargers becoming the industry standard over CCS.

Tesla sees shares fall as Panasonic cuts battery production

• In what continues to be a worrying trend for EVs, Panasonic, who supply batteries for Tesla and other automakers, announced they have cut battery production this quarter.
• Panasonic said its production has suffered from slowing uptake for high-end EVs in North America.
• Musk had previously commented that higher-for-longer borrowing costs would take its toll on demand.
• Earlier on Monday, General Motors reached a tentative deal with the United Auto Workers union, following deals by Ford Motor and Chrysler-owner Stellantis, and potentially putting an end to disruptions that some analysts had said could have given Tesla an edge.

Company News

Atlantic Lithium* (ALL LN) 20.35p, Mkt Cap £125m – Quarterly highlight award of mining license for Ewoyaa lithium project

(Ewoyaa Ownership: 40.5% Atlantic, 40.5% Piedmont, 6% MIIF Sovereign Wealth fund, 13% government of Ghana)

STRONG BUY

• The Atlantic team along with the government of Ghana have now permitted the nation’s first lithium mine at Ewoyaa.
• The team have appointed DRA Global to plan for a downstream flotation circuit to run with the Dense Media Separation plant that the mine will start off with.
• Offtake: Atlantic are working through a process to choose a partner for some or all of the 50% spodumene offtake. Piedmont hold the other 50%.
• Atlantic Lithium spent A$2.034m through the quarter on staff, admin and corporate costs
• The team also spent another A$5.954m on exploration and evaluation
• Cash and cash equivalents fell to A$10.565m at end September as a result of the expenditure
• DFS project economics:
  • Throughput: ~2-2.7mtpa, Total mined ore 30.6mt
  • Production ~300,000tpa of Spodumene concentrate (SC5.5 and SC6)
  • NPV8 post-tax: US$1.5bn
  • IRR: 105%
  • Revenue US$550mpa and $6.6bn life-of-mine, Free cash flow: US$2.4bn life-of-mine, EBITDA: US$316mpa
  • C1 Op costs US$377/t, AISC US$610/t
  • Capex: US$185m, Payback: 19 months
  • LOM: 12 years, LOM revenues increased to $6.6bn
  • Assumption US$1,587/t with $1,200/dmt long term pricing for SC6% FOB Ghana Port

*SP Angel acts as Nomad to Atlantic Lithium. Two mining analysts from SP Angel recently visited the Ewoyaa mine site in Ghana and drove onto Takoradi to check the quality of the road to port. Our analysts also visited the Ministry of Minerals Commission and MIIF, the Ghana Minerals Income Investment Fund.

Aura Energy* (AURA LN) 15p, Mkt Cap £87m – Uranium exploration targets offer potential to raise Tiris project to world-class scale

(Aura holds 85% of the Tiris Uranium Project, Mauritania with 15% held by ANARPAM, a Mauritanian Government entity.)

• In his letter to shareholders in the 2023 Annual Report, Aura Energy’s Chairman, Philip Mitchell, confirms the focus on the development of the Tiris uranium project in Mauritania and on progressing the Häggån Project in Sweden.
• Mr. Mitchell highlights the increasing global focus on nuclear energy as “a critical part of the future energy mix … [as]… the only non-fossil fuel energy source that is continuous, safe, and capable of providing reliable, affordable baseload power”.
• He points out that “70% of China’s electricity is generated from burning fossil fuels” and that in India, where “coal and other fossil fuels account for 57% of generating capacity … power demand is expected to nearly double by 2030 from 220 gigawatt today”.
• In this context, Mr. Mitchell explains that its Tiris Project is both “largely unexplored … [and] … very easy to access” with mineralisation recoverable from less than 7m depth and requiring “no expensive crushing ahead of an easy washing and screening process that upgrades 285ppm U3O8 to over 2000ppm U3O8 in leach feed as a consequence of a simple low-cost screening process”.
• He expresses the view that Tiris “is highly likely to be considerably expandable … [and that] … Mauritania is a stable jurisdiction that welcomes international investment”.
• During FY 2023, the Tiris project was awarded its “Mining Convention from the Mauritanian Government, which provides security of tenure and secure fiscal terms for 30 years”.
• The company’s DFS, based on a 52% increase in Measured and Indicated Resources for the Tiris Project, envisages:
  • Simple free dig, open cast mining,
  • AISC of US$ 28.77 / lb U₃O_8,
  • 18-month construction time line
  • Capex US$87.9m + additional capex of US$90.3m,
  • Production 2.0mlbs pa U₃O_8,
  • Process enables quick increase to >2,000ppm U₃O₈
  • NPV of US$ 226M – post-tax – Assumes: US$64/lb U3O8 price and 30-year mine life
  • IRR of 28%,
  • NPV_8% of US$347m – Assumes US$79/lb and 17-year mine life.
  • IRR of 35%
  • Aura forecasts 57% cash margins,
  • 76% of forecast production from Proved and Probable Reserves, and 24% from Inferred Mineral Resources
• At Häggån, mineralisation is polymetallic containing “vanadium, nickel, molybdenum and uranium, with a high-value sulphate of potash produced as a by-product”.
• Mr. Mitchell describes the uranium content of the Häggån resource as “very significant” and says that it “is subject to the uranium ban passed in 2018, which is being reviewed in the context of a stated policy to rescind the ban by the present Swedish government”.
• He also explains that the scoping study for the project, addressing “mining only 3% of Häggån’s extensive mineralisation … shows that Häggån can deliver certainty for domestic Swedish and European supply for vanadium, sulphate of potash and potentially uranium production that would contribute significantly to de-risking the supply and meeting the expected growth in demand”.
• Outlining future opportunities, the Chairman says that “Aura is in a strong position with an advanced, low-cost uranium project in Tiris that is progressing to be development-ready just as nations reflect on the practicalities of transition from carbon … [and also offers] … significant resource upside … [which] … could see Tiris develop as a large, long-life, low-cost and expandable operation”.
• He anticipates the possibility of “changes in legislation in Sweden … [which he describes as]… a jurisdiction reliant on nuclear power and committed to non-fossil fuel energy” helping to unlock the potential of the Häggån resource

Conclusion: The Tiris uranium project in Mauritania is well placed to aid the global transition from fossil fuels towards sustainable energy while possible legislative changes in Sweden could provide impetus for the Häggån project.

*SP Angel acts as Nomad and Broker to Aura Energy

Base Resources (BSE LN) 6.3p, Mkt cap £73m – Quarterly activities report as ilmenite and rutile prices rise

• Base Resources, which operates the Kwale mineral sands mine in Kenya, provides its quarterly production figures.
• 38.8kt of ilmenite produced in the September quarter, down 54% from same period last year and 30% from the June quarter.
• 9.6kt of rutile produced for the period vs 13.8kt in the June quarter and 18.9kt same period last year.
• Sales revenue stood at $1,029/t vs $695/t the previous quarter.
• Operating costs at $343/t and COGS at $442/t vs $240/t and $263/t for the previous quarter respectively.
• Ilmenite sales fell to 11.1kt for the period whilst rutile sales slid to 5.5kt for the period.
• Quarterly sales volumes are showing volatility as a result of the Company’s bulk shipping methods.
• Unit operating costs are higher on the back of lower production.
• Unit revenue rose as a result of the higher-grade product sales mix.
• FY24 production guidance:
  • Rutile – 35-41kt
  • Ilmenite – 130-160kt
  • Zircon – 13-16kt.
• Limited progress on Toliara as dialogue with government limited as focus on Presidential elections takes priority.
• Kwale East exploration activities discontinued on the back of disappointing drilling results.
• Cash position of $77m and no debt.
• Mineral Sands Market Commentary
  • Softening property sectors across major global markets weighing on demand.
  • However, China pigment plants seeing elevated levels of production.
  • Domestic China pigment demand seeing seasonal improvement towards quarter-end.
  • Pigment producers in Taiwan and Europe reducing capacity.
  • Ilmenite demand supported by Chloride pigment producers.
  • Weak demand expected to be offset by suspension of synthetic rutile production from major producer.
  • Downward price pressure on rutile expected to accelerate.

Beowulf Mining* (BEM LN) 1.5p, Mkt Cap £17.6m – Renewal of Kallak exploration licence and China graphite ban update

• Beowulf announces the renewal of the exploration licence at its flagship Kallak Iron Ore Project.
• The Company has been awarded a renewal of the Kallak nr 101 licence, which surrounds the Kallak exploitation concession.
• The licence encompasses the majority of the Kallak South-North deposit, which hosts the 21mt MRE @ 26.9% Fe in the indicated category.
• Management believes the Kallak South deposit offers the project a number of additional years in mine life.
• The Beowulf team recently announced a roadmap for Kallak as follows:
  • PFS and EIA submission in 2H24
  • DFS in 4Q25
  • Construction decision in 1Q26
• We anticipate high-grade premiums to continue to increase, supporting the long-term economic potential of Kallak.
• Alongside development of Kallak, Beowulf also holds the GAMP graphite anode facility project in Finland, with an EIA expected in 1Q24 and DFS work expected to begin mid-2024.
• Beowulf’s Grafintec is expected to benefit from China’s recent announcement to ban graphite exports from December 1^st.
• Grafintec is looking to produce coated spherical graphite for gigafactories, fed by ex-China feedstock.
• Grafintec’s strategy is aligned with the EU Critical Raw Materials Act and is set to benefit from the reshoring of Europe’s critical minerals supply.

*SP Angel acts as Nomad and Broker to Beowulf Mining

Celsius Resources* (CLA LN) 0.6p, Mkt Cap £13.5m – Quarterly report confirms progress at the MCB project as well as advances at the Botilao and Sagay exploration projects in the Philippines.

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

BUY

• In its quarterly report for the three months to 30^th September, Celsius Resources highlights the receipt of approval of its Mining Project Feasibility for its flagship Maalinao-Caigutan Biyog Copper-Gold Project (MCB) as well as the granting of an exploration licence for the 40% owned Botilao Copper-Gold Prospect located which is located around 2km south-west of MCB.
• The company has previously outlined plans to develop an underground mine on the 338mt resource at MCB over a 25 year mine life and produce a copper/gold concentrate.
• Initial investment of US$253m is expected to deliver an after-tax NPV8% of US$464m and IRR of 31% at a copper price of US$4.00/lb (~US$8,800/t) and a gold price of US$1,695/oz.
• The plan is to process an average of around 2.3mtpa of ore at an average grade of 1.14% copper and 0.54g/t gold during the initial 10 year of the project delivering cash costs of cash costs of US$0.73/lb net of gold credits.
• During an initial two-year exploration period at Botlao, Celsius Resources plans to “define the extent and distribution of the observed mineralisation along Botilao Creek … to generate future targets for possible geophysical surveys and eventual diamond drilling activities” using geochemical sampling and mapping.
• “Detailed mapping … [at Botilao] … will focus on identified mineralised outcrops to ensure proper understanding of the classification and controls of mineralisation”.
• Elsewhere, the company describes progress on the wholly-owned Sagay prospect on Negros island in the Philippines where work, including the drilling of 11 holes (~825m), “focused on the shallow high-grade copper, or the Secondary Supergene Chalcocite Enrichment zone”.
• Outside the Philippines, Celsius Resources confirms that it is continuing metallurgical test work on material from its 95% owned Opuwo cobalt project in Namibia with the objective of optimising the “floatation, roasting and leaching conditions” for the project.
• “Final results and reports … [on the metallurgical work at Opuwo] … are expected in the next quarter, these results along with additional mine planning work that is being conducted in the Philippines will be used as a basis to evaluate the viability of the project and what additional studies may required with the objective to produce a revised Scoping Study for the Opuwo project during 2024”.
• Celsius Resources confirms a 30^th September cash reserve of A$3.7m.

Conclusion: Celsius Resources continues to progress its MCB copper/gold project and to advance its other exploration projects in the Philippines and metallurgical testing of the Opuwo cobalt project in Namibia.  We await further news as the various technical programmes continue.

*SP Angel acts as broker to Celsius Resources.

First Quantum Minerals (FM CN) – C$20, Mkt cap C$14bn – Legal challenge and calls for a referendum on the Cobre Panama mine

• The industry website, Mining.com is reporting that First Quantum Minerals’ contact with Panama over the over the Cobre Panama mine may be subject to a legal challenge over concerns that the agreement may be in violation of Panama’s constitution. Panama’s top court considers lawsuit over First Quantum deal – MINING.COM
• The Supreme Court is expected to issue its initial opinion within 10 business days and in the event that it decides to proceed, “will request written arguments from attorneys representing both sides”.
• According to the website, the challenge follows the 20^th October decision of Congress to approve revisions to its contract with First Quantum Minerals which now holds “the right to mine copper for 20 years, with the option of an additional 20 years. It also includes a minimum annual payment to the government of $375 million, which President Laurentino Cortizo said will be used to increase pension payments”.
• Challengers are pressing for a national referendum.

Conclusion: Panama’s Supreme Court is expected to decide on a constitutional challenge over the Cobre Panama mine within ten days.

Goldstone Resources* (GRL LN) SUSPENDED – Gold loan update

• The Company released an update regarding is secured gold loan outstanding and due for repayment on 10 November 2023.
• The team is actively looking for funding proposals to extend, renegotiate or refinance the facility.
• Until such solution is found the Company is not in a position to release 2022 annual and 2023 interim reports as auditors are not able to sign off on accounts.
• As a result trading in shares will remain suspended until accounts can be published with AIM listing may potentially be cancelled if not accounts are ready by 31 December 2023.
• The Company is highlighting that there is no guarantee that a refinancing agreement with its secured creditors will be reached in which case security over the Company’s primary assets could potentially be enforced.
• Total principal and accrued interest owed under the gold loan stood at 2.4koz (~$4.8m at current $2,000/oz spot prices) as of 30 September 2023.
• The Company has recently completed a gold pour of 376oz at t Homase operation providing a cash inflow of $0.7 and had $0.2m in closing cash balance as of Q3/23 end.

*SP Angel acts as broker to Goldstone Resources

Great Southern Copper (GSCU LN) 2.9p, Mkt Cap £7.5m – Expansion of the Monti Lithium project in Chile

• Great Southern Copper reports a 40% expansion in the area of its Monti Lithium project in Chile’s Salar de Atacama region to 33,100 hectares (331km²).
• The expanded area results from filing additional applications for exploration concessions adding to the previously announced US$2.26m cash and shares acquisition of the initial 235km² Monti Lithium project area.
• The company says that “Over the coming months … [it] … will conduct due diligence on the project and prepare plans for its exploration programmes”.
• Chief Executive, Sam Garrett, said that the additional applications “have strategically targeted areas where we believe the potential for lithium-rich brine fluid-flow into the Salar de Atacama basin is enhanced by large-scale geological structures”.

GreenRoc Mining* (GROC LN) 4.22p, Mkt Cap £6.2m – PEA highlights value of Amitsoq graphite mine in Greenland

• GreenRoc report results of their new PEA ‘Preliminary Economic Assessment’ done by SLR Consulting.
  • The NPV8 US$235m pre-tax, US$179m post-tax
  • IRR 31.1% pre-tax, 26.7% post-tax.
  • Production: 77,000tpa.
  • Cg grade: 94% grade.
  • Capex: US$131m inc. a 25% (US$26m) contingency
  • Opex: US$121/t of milled ore grading 21.3% Cg.
    • Mining US$53.9/t,
    • Processing US$24.5/t
    • G&A: US$32.7/t
    • Shipping: US$10/t
  • Revenue US$89m pa
  • Total gross revenue less Capex, Opex and other costs and charges US$36 mpa
  • Assumption: US$1250/t at 94% Cg concentrate average basket price.
  • Opex: US$577/t of 94% Cg concentrate
  • Life of Mine: 22 years
  • Throughput: 400,000tpa at full mining rate after two years of ramp-up.
• The capital cost seems reasonable for a project in Greenland, where capital costs are normally elevated due to logistics and the need for anything at surface to be resistant to the cold.
• Previous development at the Amitsoq mine is a benefit though existing production adits will be scalped to create larger 5m x 5m drives.
• Resources: There are substantial graphite resources not yet included in the mine plan with the UGL ‘Upper Graphite Layer’ not yet included in the mine plan.
• Around 75% of the mined ore in the PEA is Measured and Indicated. Management believes the remaining ~25% can be upgraded into higher resource categories.
• Anode material: GreenRoc is also looking to further process its graphite into Li-ion anode material for EVs and is working on an Anode feasibility study supported by a grant from the UK Advanced Propulsion Centre.
• Power: the mine will run initially on 11MW of diesel generated power. This will be largely replaced with hydropower and wind power in time lowering cost and reducing dependence on deliveries.
• Total mine inventory is 8.26mt grading 21.3% Cg graphite with a 18.7% Cg cut-off grade.
• Personnel: 135 personnel in total with 45 on-shift at any one time plus another 19 per shift (37) in the town of Nanortalik.
• Tailings: some 86% of the tailings should be backfilled into the mine with the remaining waste stored as wet tailings.
• Work programme: Bulk ore-sample of 10-20t to be collected from the old underground workings at Amitsoq and shipped to Europe for process design work and offtake analysis.
• Phase III drill programme planned for 2024 to upgrade the resource and provide geotechnical data for the PFS.
• EIS and SIA studies for Exploitation Licence application

Conclusion:  GreenRoc is very well placed to accelerate construction and production from Amitsoq graphite mine.

China has threatened to ban the export of high-grade graphite outside China from 1^st December causing some consternation to new European and US Gigafactories and EV automotive manufacturers. We already know of one German automotive company which has asked to restart talks with a graphite miner and we feel sure some desperate calls are being made.

The idea of China continuing to sell >90% of the world’s battery grade graphite to the world at subsidised cost was simply too good to be true. While we feel sure the ban will be referred to the WTO, the disruption to US and European EV manufacturers could be substantial.

We do not know how much Li-ion grade graphite has been stocked but, in a world of just-in-time supply chains, we suspect it’s not a lot.

*SP Angel acts as broker to GreenRoc Mining

KEFI Gold and Copper* (KEFI LN) 0.6p, Mkt Cap £26m – Q3 operations update

• The Company released a quarterly update on developments at its portfolio of gold and base metals assets in Ethiopia and Saudi Arabia.
• In Ethiopia, the team is awaiting final credit committee approvals regarding $190m of secured debt in the project.
• That follows earlier announcement of finalisation of details of project exemptions from exchange and capital controls received from the Ethiopia Central Bank.
• After credit committee approvals are secured relevant field, legal, plant and mining teams will mobilise to the site concurrently.
• The remaining share of the $320m project capex is planned to be covered by equity risk capital instruments including:
  • $40m from the Ethiopian Federal and Regional Government;
  • $90m from KEFI subsidiaries in the form of Equity Risk Notes (ie convertibles) subscribed by the project lenders and large regional investors.
  • The Company is also arranging a subsidiary-level funding capacity to cover any potential last minute capital budgeting refinements including pricing adjustments for the fixed price lump-sum plant components last priced at end 2022.
• At Jibal Qutman in Saudi Arabia, DFS related works continues at pace with infill, metallurgical and geotechnical drilling completed.
• Metallurgical testwork completed showed ~90% recoveries for oxidised ore and ~69-74% for fresh ore.
• The team is working on finalisation of geotechnical model to update the MRE that will is expected to be ready in Q4/23 to be followed by finalisation of Ore Reserves.
• Concurrently, step out drilling is ongoing focused on the more than 12 other known mineralisation targets that may expand the scope of the Jibal Qutman project.
• The team reiterated its commitment to launch development works in 2024 subject to securing the mining license and funding.
• At Hawiah in Saudi Arabia, the Company along with its JV partners commenced a 50,000m drilling programme to upgrade and expand the latest MRE (29.0mt at 0.89% Cu, 0.94% Zn and 0.67g/t Au).

*SP Angel acts as Nomad and Broker to KEFI Gold and Copper

Kore Potash* (KP2 LN) 0.4p, Mkt Cap £14m – $2.5m equity raise and CEO resignation

BUY

• The Company is raising $2.5m through an equity placing of 542.3m shares at 0.38p.
• Proceeds will be used to advance the EPC contract completion and general working capital purposes.
• Previously, the Company targeted to complete and sign the EPC contract with SEPCO before the end of January next year.
• The team is expecting the receipt of the financing proposal for the construction of the Kola Potash Project after the EPC contract completion in Q1/24 followed by mobilisation of construction contractors in H1/24.
• Part of the placing (~206m shares) is subject to shareholders’ approval that will be sought at a general meeting, details of which will be made public shortly.
• David Hathorn, Chairman of the Company, is subscribing for a nearly 30% of new shares (162.4m) investing ~$750k.
• Harlequin Investments, a 11% shareholder in the Company, agreed to subscribe for 108.3m or ~20% of new shares increasing their stake in the Company.
• Separately, the Company announced the resignation of its CEO, Brad Sampson, with immediate effect with Chairman assuming the role of CEO in the interim.
• Mr Sampson will continue as CEO through the end of November and the Company is not expecting to appoint a new CEO until after the receipt of the financing proposal for the construction of the Kola Potash Project.

*SP Angel acts as Nomad and Broker to Kore Potash

Resolute Mining (RSG LN) 15.55p, Mkt Cap £395m – Minor reductions to 2023 production guidance as Syama oxide mine hit by a pocket of carbon rich mineralisation at Tabakoroni

• Resolute Mining reports production of 74,056oz of gold in the three months to 30^th September (Q3 2022 – 90,404oz) bringing YTD output to 250,687oz (2022 – 261,292oz).
• Costs on an all-in-sustaining (AISC) basis amounted to US$1,459/oz (Q3 2022 – US$1,513/oz) bringing the YTD average cost to US$1,466/oz (2022 – US$1,483/oz).
• “Full-year guidance has been revised down to 330,000 – 340,000oz from our initial guidance of 350,000oz due to mining lower grades at Syama Oxide which has impacted yearly production … [although] …. AISC guidance has been maintained at $1,480/oz”.
• The company attributes the lower quarterly gold output to its Syama oxide operation in Mali where it experienced “issues stemming from the high-carbon pocket of Tabakoroni ore”.
• Resolute Mining confirms that its other operations at Mako and on the sulphide operation at Syama “performed in line with expectations”.
• Managing Director and CEO, Terry Holohan, said the company expects “an improvement at both Syama operations and a similar performance at Mako” during Q4.
• He welcomed the cost performance “of $1,459/oz which was in line with our expectations and pleasingly, despite the reduction in gold production, a decrease from the prior Quarter ($1,489/oz) … [which he said demonstrated that] … our committed focus on sustainably reducing costs across the group … [had] …started to pick up momentum”.
• Describing the operational issues at the Syama Oxide unit, “Ore tonnes mined decreased … [to 344,478t from 477,016t in the preceding, June, quarter] … due to reduced equipment utilisation caused by bogging due to the clayey nature of the pits and the suspension of mining from the Tabakoroni pit due to the high carbon content”.
• Oxide ore grades 1.57g/t were, however, consistent with the 1.55g/t of the preceding quarter and superior to the 1.40g/t achieved in the September quarter of 2022.
• It also seems encouraging that gold recovery rates of 86% exceeded those of the preceding quarter of 81%, although oxide gold production from Syama declined by “25% compared to the prior Quarter” to 11,644 oz.
• Gold production from the sulphide operation at Syama of 34,805oz during the quarter brought YTD output to 114,536oz reflecting a decline in mined grades to 2.32g/t (Q2 2023 – 2.88g/t) although the company expresses optimism that “over Q4 we expect to have access to higher grades areas as well as higher tonnages”.
• At Mako in Senegal, mined ore volumes declined to 493,257t (Q2 2023 – 558,978t) and despite slightly improved head grades of 1.84g/t (Q2 2023 – 1.80g/t) gold output declined to 27,587oz (Q2 2023 – 30,239oz bringing YTD output to 91,430oz (2022 YTD – 98,990oz).
• “In Q4, we expect … [Mako to deliver] … a lower mined tonnage at a higher grade given the successful completion of the Stage 7 cut-back” which is expected to help increased profitability in both 2024 and 2025 “with production between 130,000-140,000oz per year at an AISC reducing to US$1,100-1,200/oz from approximately $1,450/oz”.

Conclusion: Operational issues at the oxide mine Syama dented quarterly output and resulted in a downgrading of operational production guidance for 2023 by 3-6% to the range 330-340,000oz with AISC cost guidance unchanged at US$1,480/oz.  Q4 is expected to see improving performance.

 Sovereign Metals* (SVML LN) 24p, Mkt Cap £135m – Quarterly highlights ramp up in Malawi site operations and ongoing drilling and other Kasiya project studies

• Sovereign’s quarterly report reminds us that its Kasiya rutile/graphite project in Malawi should become the largest rutile producer in the world.
• Natural Rutile is the highest-grade, purest, natural titanium feedstock available and sells for CNY13,150 (US$1,799/t) for 95% TiO2 Rutile around 4.5 times the price for Ilmenite concentrates grading 50% TiO2.
• Rio Tinto’s recent injection of A$40.6m is a positive and supportive move which should give investors significant confidence in the potential for this project.
• Malawi government has constituted an Inter-ministerial Project Development Committee to work alongside the Company to assist in the permitting process.
• This is a very interesting move for a government to set up a specific committee to oversee a permitting process and is due to the importance of the project for the nation of Malawi.
• We hope the committee will accelerate the permitting process as well as advising on potential local ESG issues.
• Expenditure: Sovereign Metals spend A$1.874m through the quarter on drilling and exploration including assays, metallurgical test work, studies and reserve/resource estimation, tenements rents and rates as well as the Malawi site office, personnel, field supplies, equipment, vehicles and travel
• Other payments included A$840,000 for staff, admin and corporate costs.
• Sovereign also incurred A$296,000 in other business development and NGX demerger costs, partially offset by A$72,000 on interest received on the A$40.598 of proceeds from Rio Tinto.
• The team was recently boosted through the promotion of Frank Eagar to Managing Director and CEO from his previous role as General Manager in Malawi.
• Julian Stephens, the previous MD is moving to a Non-Executive Director role.
• The company held a cash and cash equivalents of A$43m at end September.

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

Sunrise Resources (SRES LN) 0.08p Mkt Cap £2.7m – Analysis of historic data from the Reese Ridge zinc/lead/silver project, Nevada

• Sunrise Resources reports that reinterpretation of historical airborne electromagnetic geophysical data generated in 2010 over its Reese Ridge zinc/lead/silver/gallium exploration project in Nevada has “has confirmed an annular zone of low resistivity … consistent with a Carbonate Replacement Deposit (“CRD”) model for mineralisation”.
• In addition, petrological analysis of “mineralised surface samples … has indicated that the zinc mineralisation at surface is largely contained in secondary minerals, the result of weathering or alteration, but remnants of zinc sulphide (sphalerite) and lead sulphide (galena) were identified consistent with sulphide mineralisation at depth and a possible source for the low resistivity anomaly”.
• The company also says that a “review of chemical analyses from the surface mineralisation has identified anomalously high levels of the metal gallium in the high-grade zinc samples – up to 69ppm gallium” and explains that “approximately 80% of the world’s gallium is produced in China” which is restricting exports of a mineral commodity required for semi-conductors and in solar panel production.
• In view of the results from the review and reinterpretation of the historical data, Sunrise Resources “is now planning a follow-up exploration programme to include drill testing”.
• Executive Chairman, Patrick Cheetham, confirming that the “project is now drill ready” welcomed the identification of gallium at Reese Ridge saying that it “is listed as critical on the US Department of Energy’s 2023 list of critical minerals”.
• Mr. Cheetham confirmed that Sunrise Resources “will ensure that gallium is included in all further analyses at Reese Ridge”.

 Yellowcake (YCA LN) 551p, Mkt cap £1.2m – Quarterly activities report as uranium prices jump 30%

• Yellowcake provides its quarterly operating update.
• The Company took delivery of 1.35mlb of U₃O₈ in line with its 2022 agreement with JSC National Atomic Company Kazatomprom.
• The uranium was secured at $48.9/lb and funded by the February 2023 placing.
• Yellowcake is storing the uranium at Cameco’s storage facility in Ontario.
• The Company now holds 20.16mlb of U₃O_8.
• Uranium spot prices have risen 31.3% from $56/lb to $73.5/lb over the quarter.
• The value of Yellowcake’s U₃O₈ stood at $1,481m as of the end of the reporting period.
• Uranium Market Commentary
  • Forward price futures rising to $75/lb and $79/lb respectively for the 3-yr and 5-yr prices.
  • Sprott physical buying subdued in Q3, now holding 62mlb.
  • Longer term price rising to $61/lb.
  • Kazatomprom reporting a strong order book and growing sales portfolio.
  • Cameco notes it needs to see ‘more urgency in demand’ to ramp up production but highlighted a ‘constructive’ market.
  • Limited availability of spot supply combining with increased nuclear utility and supply risks from Niger and Russia.

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

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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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