Hawkish Fed comments pull risk sentiment lower
MiFID II exempt information – see disclaimer below
Alien Metals (UFO LN) – Heritage Agreements for the Hancock Iron Ore project
Fulcrum Metals (FMET LN) – Expansion of Saskatchewan exploration area
Thor Energy (THR LN) – Geophysical exploration at Alford East
IGTV: Copper will still move up despite a gear shift down in carbon-zero targets https://youtu.be/jbywf2hmEU8?si=yxJcwGiE1_V121Ok
VOX: 29/09/23: https://audioboom.com/posts/8375969-john-meyer-on-china-s-property-implosion-plus-atlantic-lithium-bushveld-sovereign-metals
*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.
| Dow Jones Industrials | -0.22% | at | 33,433 | |
| Nikkei 225 | -1.83% | at | 31,213 | |
| HK Hang Seng | -3.08% | at | 17,262 | |
| Shanghai Composite | Closed |
Economics
US – Hawkish rhetoric from monetary policymakers see the US$ and bond yields climb weighing on risk sentiment.
- A number of FOMC members reiterated the “higher for longer” rhetoric in relation to tight monetary conditions.
- “Inflation continues to be too high, and I expect it will likely be appropriate for the (Fed) to raise rates further and hold them at a restrictive level for some time,” Fed Governor Michelle Bowman said yesterday.
- “In my view, the most important question at this point is not whether an additional rate increase is needed this year or not, but rather how long we will need to hold rates at a sufficiently restrictive level to achieve our goals,” Fed Vice Chair for Supervision Michael Barr said.
- “I suspect we may well need to raise the fed funds rate once more this year and then hold it there for some time as we accumulate more information on economic developments and assess the effects of the tightening in financial conditions that has already occurred,” Cleveland Fed leader Loretta Mester said.
Evergrande shares jumped as much as 42% this morning after trading resumed after a suspension, although, later shares pared some of their gains trading around 14% up on the day, FT writes.
- Trading in shares was suspended last week following a Bloomberg report that Evergrande Chairman Hui Ka Yan was under police surveillance.
- The Company said earlier that a police investigation had stopped it from proceeding with refinancing.
Japan – Finance Minister Shunichi Suzuki said authorities are watching the currency closely and stand ready to respond.
- The yen is trading close to 150 level reflecting a difference in monetary policy outlooks with the BOJ remaining relatively dovish compared to its US counterpart.
Turkey – Inflation rate pulled back to 4.75%mom in September, nearly half the rate recorded the previous month.
- Prices climbed 61.5% from the previous year.
- The central bank lifted its benchmark one week repo by 5pp to 30% in late September marking a fourth rate hike since June.
- President Erdogan having secured a win in elections embraced “tight monetary policy” in a sharp turnaround to his previous stance that called high interest rates the “mother and father of all evil”.
Australia – The Reserve Bank of Australia left rates unchanged at 4.10% for a fourth month but warned that further tightening might be needed, Reuters writes.
Currencies
US$1.0486/eur vs 1.0581/eur previous. Yen 149.86/$ vs 149.62/$. SAr 19.256/$ vs 18.874/$. $1.208/gbp vs $1.221/gbp. 0.632/aud vs 0.642/aud. CNY 7.302/$ vs 7.298/$. Dollar Index 107.02 vs 106.07 previous.
Commodity News
Precious metals:
Gold US$1,838/oz vs US$1,844/oz previous
Gold ETFs 88.1moz vs 88.1moz previous
Platinum US$879/oz vs US$911/oz previous
Palladium US$1,199/oz vs US$1,248/oz previous
Silver US$21.21/oz vs US$21.83/oz previous
Rhodium US$4,100/oz vs US$4,100/oz previous
Base metals:
Copper US$7,974/t vs US$8,320/t previous
Aluminium US$2,311/t vs US$2,358/t previous
Nickel US$18,711/t vs US$18,905/t previous
Zinc US$2,554/t vs US$2,664/t previous
Lead US$2,121/t vs US$2,175/t previous
Tin US$23,944/t vs US$23,950/t previous
Energy:
Oil US$90.03/bbl vs US$92.6/bbl previous
Natural Gas €37.890/MWh vs €42.300/MWh previous
Uranium UXC US$70/lb vs US$70/lb previous
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$120.1/t vs US$114.9/t
Chinese steel rebar 25mm US$540.3/t vs US$540.3/t
Thermal coal (1st year forward cif ARA) US$130.0/t vs US$130.0/t
Thermal coal swap Australia FOB US$156.0/t vs US$156.0/t
Coking coal swap Australia FOB US$321.0/t vs US$321.0/t
Other:
Cobalt LME 3m US$33,071/t vs US$33,420/t
NdPr Rare Earth Oxide (China) US$71,252/t vs US$71,252/t
Lithium carbonate 99% (China) US$21,033/t vs US$21,033/t
China Spodumene Li2O 6%min CIF US$2,290/t vs US$2,290/t
Ferro-Manganese European Mn78% min US$1,026/t vs US$1,026/t
China Tungsten APT 88.5% FOB US$305/mtu vs US$305/mtu
China Graphite Flake -194 FOB US$645/t vs US$645/t
Europe Vanadium Pentoxide 98% 6.6/lb vs US$6.6/lb
Europe Ferro-Vanadium 80% 29.25/kg vs US$29.25/kg
China Ilmenite Concentrate TiO2 US$316/t vs US$316/t
Spot CO2 Emissions EUA Price US$85.6/t vs US$85.6/t
Brazil Potash CFR Granular Spot US$345.0/t vs US$345.0/t
Battery News
Thailand EV sales shatter forecasts
- Thailand’s EV sales exceeded expectations in the first half of the year, reaching 49,319 units, surpassing the initial full-year forecast.
- The revised forecast predicts a 151% increase in sales to reach 80,700 units, up from the previous estimate of 20.7% growth.
- Favourable incentives, including import duty reductions, subsidies ranging from 70,000 to 150,000 baht for EV purchases, and reductions in excise taxes on EV batteries, have contributed to the rapid growth of EV sales.
- Thailand’s EV penetration rate is expected to reach 8.7% in 2023, up from 3.8% in 2022.
- The government’s proposed EV 3.5 policy aims to subsidize EVs at a rate of approximately 100,000 baht per vehicle and mandate car manufacturers to set up EV manufacturing facilities in Thailand proportional to the number of imported EVs.
- Thailand’s EV fleet is expected to grow rapidly, reaching around 100,000 units in 2023 and increasing to 900,000 units by 2032.
- Despite the growth, there are concerns about the insufficient number of public charging stations, potentially causing buyers to delay EV purchases due to range anxiety.
- PTT Oil & Retail Business plans to install 7,000 charging stations by 2030, utilizing its existing petrol filling stations as a foundation for EV charging.
China’s EV manufacturing powers global industry chain
- In Hefei, China, Volkswagen’s new energy vehicle (NEV) production facility, covering an area equal to 16 soccer fields, uses over 800 robots to assemble six different NEV models, highlighting China’s prominence in the electric vehicle industry.
- Volkswagen acquired a 4.99% stake in Chinese EV startup XPENG for co-developing electric cars, focusing on NEV software expertise. They plan to develop two B-class battery electric vehicle models for the Chinese market.
- Several other global automakers, including BMW, Toyota, and ZF Friedrichshafen, are partnering with Chinese companies for electric vehicle components, batteries, and technology development.
- Tesla’s Gigafactory Shanghai achieved its two millionth vehicle production milestone, with over 95% localization of parts and more than half of Tesla’s global electric vehicle deliveries coming from the Shanghai plant.
- Chinese companies are expanding their production capacities globally, creating jobs and technology transfer. Chinese suppliers for Tesla are replicating their industrial chains in Mexico.
- Gotion High-tech plans EV lithium battery plants in Illinois, USA, and Debrecen, Hungary. CATL and Gotion High-Tech partnered with Vietnamese automaker VinFast for battery manufacturing, and EVE Energy is establishing an R&D facility in Ohio, USA, focusing on lithium-ion batteries.
- Chinese battery manufacturers are adopting a “glocal” strategy, establishing China as a global hub for EV production while also creating bases in international markets, reinforcing a resilient global supply chain.
Company News
Alien Metals (UFO LN) – 0.2p, Mkt cap £12.4m – Heritage Agreements for the Hancock Iron Ore project
- Alien Metals reports that its’ wholly-owned Iron Ore Company of Australia (IOCA) has concluded Heritage Agreements with the the Karlka Nyiyaparli Aboriginal Corporation RNTBC (“KNAC”) for its 90% owned Hancock Iron Ore project, near Newman in the Pilbara region of WA.
- The company describes the agreements as a “a critical step in the Company’s engagement with Nyiyaparli Traditional Owners in relation to the Hancock Project ” … [as they] … provide for the grant of the Licences without objection by native title parties, including the withdrawal of existing objections as well as mechanisms for engagement with the Nyiyaparli People and the conduct of heritage surveys”.
- Thanking the “the Karlka Nyiyaparli Aboriginal Corporation and its Board of Nyiyaparli Directors for their support in reaching this significant milestone … [CEO, Troy Whittaker, said that the Agreements will] … further advance the approvals pathway and in the long-term … will assist in the Company de-risking the project execution for the Hancock Project”.
- The company’s website describes a JORC compliant resource of “9.1Mt @ 60.3% Fe DSO … [Direct Shipping Ore] … of which 1.9Mt @ 60.2% Fe is the Maiden Ore Reserve”. 7.4mt of the resource is classified as ‘Inferred’ at an average grade of 60.1% iron with the remaining 1.7mt, at a grade of 61.0% iron, classed as ‘Indicated’.
- Currently, mining is planned at a rate of 1.2mtpa although this “is likely to be extended given ~80-% of tenement is unexplored” and capital requirements are expected to be ~US$20m.
- The company’s website also describes the project as having “a near 1:1 strip ratio and minimal processing requirements”.
Fulcrum Metals (FMET LN) 16.15p, Mkt Cap £8.0m – Expansion of Saskatchewan exploration area
- Fulcrum Metals reports that it has staked additional ground at its Charlot – Neely Lake uranium-gold project in Saskatchewan expanding its holding by 63% to 124.8km2.
- The additional ground is reported to extend over a 20km strike length including “an extensive 11km corridor of historic electromagnetic (“EM”) conductors coincident with the western margin of the Black Bay Fault”.
- Today’s announcement explains that in the southern part of the new ground there are “historic exploration records with trench samples assaying up to 0.43% U308, highly radioactive scintillometer readings of up to 70,000cps and grab samples assaying >2,000ppm uranium”.
- The additional licences cost only C$3,174, which CEO, Ryan Mee, described as “low-cost acquisition … [and included] … new uranium trends Fall-1 and Fall-2 … discovered in the same northeast-southwest trend as the Black Bay fault”.
- He said that the “additional claim blocks cover a significant length of the Black Bay Fault along with noted historical extensive EM conductors and high priority hyperspectral targets which add to overall prospectivity of the Charlot-Neely Lake project”.
- Conclusion: Staking ground is a low cost means to extend the exploration area in the Charlot – Neely Lake uranium-gold project. We await results once the exploration gets underway on the new area.
Thor Energy (THR LN) 1.85p, Mkt Cap £5.0m – Geophysical exploration at Alford East
- Thor Energy reports that it has started a programme of geophysical exploration on the Alford East copper and rare-earths project on the Cape Yorke Peninsula, South Australia where the company is earning an interest of up to 80%.
- The project area “covers the northern extension of the Alford Copper Belt … [which is described as] … a semi-coherent zone of copper-gold oxide mineralisation, within a structurally controlled, north-south corridor consisting of deeply kaolinised and oxidised troughs within metamorphic units on the edge of the Tickera Granite” in the Gawler Craton.
- In January 2021, Thor released an inferred mineral resource estimate totalling 125.6mt at an average grade of 0.14% copper and 0.018g/t gold for the project area based on historic drilling data.
- The new survey, which is expected to take 3-4 weeks, will use an innovative Ambient Noise Tomography (ANT) technique to “delineate the low-velocity, weathered ‘troughs’ that host the oxide copper-REE mineralisation within the Alford Copper Belt”.
- In collaboration with Fleet Space Technologies, the survey aims “to generate a new model for drill targeting higher-grade oxide copper-gold mineralisation … [and to identify] …targets, characterised by low seismic velocity” for future drilling.
- Managing Director, Nicole Galloway-Warland, said that results “from the surveys will help us become more precise in our future drilling campaigns, which will help us reduce our environmental footprint”.
- She explained that “Fleet will integrate the data from the ANT surveys, and in conjunction with Thor’s 3D geological model, it will result in a revised model to support drill targeting of higher-grade copper and REE mineralisation along strike of our mineral resource estimate and in new zones of the Alford Copper Belt”.
Conclusion: We await results from the new geophysical work at Alford East with interest
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
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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.
| Sources of commodity prices | |
| Gold, Platinum, Palladium, Silver | BGNL (Bloomberg Generic Composite rate, London) |
| Gold ETFs, Steel | Bloomberg |
| Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt | LME |
| Oil Brent | ICE |
| Natural Gas, Uranium, Iron Ore | NYMEX |
| Thermal Coal | Bloomberg OTC Composite |
| Coking Coal | SSY |
| RRE | Steelhome |
| Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite | Asian Metal |
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