SP Angel Morning View -Today’s Market View, Tuesday 5th December 2023

Ford takes 8.5% stake in Indonesian nickel project as Automakers swim upstream

MiFID II exempt information – see disclaimer below

Andrada Mining (ATM LN) – Lithium Ridge exploration samples produce battery grade spodumene concentrate

Anglesey Mining (AYM LN) – Assay results from Northern Copper Zone drilling expected in Q1 2024

CAA Mining* (Private) – Drilling highlights albitised spodumene in pegmatite zones along strike of the 3km trend on the Abasaa prospect with another two trends to be tested

Chaarat Gold (CGH LN) – £1.8m equity raise

Condor Gold* (CNR LN) – Progress report on sale process

Evolution Mining (EVN AU) – Evolution to acquire CMOC’s stake in Northparkes copper-gold mine, New South Wales

Great Southern Copper (GSCU LN) – Scout drilling to start later this month at Especularita, Chile

Rainbow Rare Earths (RBW LN) – Proposed $50m TechMet option to be funded by US DFC

Savannah Resources* (SAV LN) – Barroso fieldwork progresses at pace

SolGold* (SOLG LN) – Exploration discovery at the La Florida prospect

Nickel – Ford takes 8.5% stake in Indonesian nickel project

• Ford is partnering with China’s Zhejiang Huayou Cobalt Co. and Vale through an investment in an Indonesian nickel project.
• The $3.8bn plant will produce 120ktpa of nickel-cobalt hydroxide.
• PT Koloka Nickel is currently owned 80% by Huaqi and 20% by Vale Indonesia.
• Ford’s investment will reduce Vale’s stake to 18.3% and Huaqing’s to 73.2%.
• The project is anticipated to take three years to build and Ford will hold the option to increase its stake to 17%.

Conclusion: This is an important precedent with Ford taking a direct stake in a new project to ensure it has access to new metal production for its EV battery business

Copper and iron ore slide on renewed China pessimism as Moody’s cuts outlook to Negative

• Copper prices weakened alongside base metals over a combination of China pessimism and a stronger dollar.
• The dollar’s recent slide had been a major tailwind to copper prices, with Chinese traders boosting buying through a stronger Yuan.
• Yesterday’s reversal weighed on copper, which fell from August highs of $8,600/t to $8,361/t today.
• Iron ore also fell below $130/t, having been surprisingly strong in recent weeks.
• China pessimism is resurfacing, with Moody’s downgrading the Country’s sovereign bonds to negative overnight.
• China equities are sliding to 13-month lows, as the Hang Seng slumped 2% overnight.

Nornickel sees copper demand expanding by 2% this year and by 3% in 2024 balanced by increased Chinese smelting, refining capacity

• They reckon European demand will fall 4% with some recovery next year.
• Nornickel reckon a a lack of any new Tier 1 mines will put increasing pressure on existing expansions to supply the market.
• Improving processing technologies should help but also raise the risk of disruption to supply with fewer larger mines supplying global markets
• Nornickel estimate refined demand 25.3m this year and 26mt next with scrap contributing 5.8mt holding steady this year and rising to 6mt in 2024
• They see mine supply rising 2% to 22.3mt this year and 3% next aided by Kamoa-Kakula (DRC), Quellaveco (Peru), QB2 (Chile), Oyu Tolgoi (Mongolia) and Udokan (Russia)

Gold whipsaws in volatile trade after dollar bounces from lows

• Gold prices suffered one of their worst daily falls on record yesterday, with future prices slumping from $2,125/oz to $2,021/oz.
• The move followed a sharp jump in low volume Asian trading, which quickly faded as the dollar strengthened on a bounce in Treasury yields.
• The 10-Year yield bounced to 4.3% yesterday, hitting bullish wagers on 1H24 Fed rate cuts.
• Bond buying had likely been overextended, with traders taking profits and hedging exposure.
• Gold was equally extended, with money managers flipping net bullish.
• Markets are currently pricing in a 55% chance of a Fed rate cut by March.
• Focus turns to key labour market data this week, with JOLTs data today, ADP payrolls tomorrow and nonfarm payrolls due on Friday.
• Any sign of unexpected strength in the US labour market is expected to weigh on gold prices and lift the dollar. However, persistent trends of slowing economic growth may encourage another assault on the $2,100/oz mark.

Bitcoin ($41,646.8) – Prices driven higher by risk-on trade on topping out of the interest rate cycle

• Investors are also encouraged by the potential approval of Bitcoin ETFs.
• What happens when a super-smart AI-driven Quantum computer starts hacking Bitcoin wallets?
• Could this be the biggest financial heist in history?

Economics

China – Moody’s credit agency cut its outlook on the nations credit rating to negative on the back of slowing economic growth outlook and property sector crisis.

• The agency currently rates sovereign debt at A1.
• Moody’s expects economic growth to slow down to 4% in 2024 and 2025.
• Separately, private business surveys showed a pick up in growth rates through November in a sign of firmer market conditions.
• Caixin Manufacturing PMI (released last Friday): 50.7 v 49.5 October and 49.6 est.
• Caixin Services PMI: 51.5 v 50.4 October and 50.5 est.
• Caixin Composite PMI: 51.6 v 50.0 October.

President Xi calls for the SHFE to speed up the construction of a world-class exchange in his visit to the ‘Shanghai Futures Exchange’

• Xi then visited the Zhangjiang Science City in Pudong followed by tour of the Minhang District affordable housing district
• The visit to the SHFE is significant in that it demonstrated Xi’s support for further growth in the SHFE market and the system it represents.
• The visit also implies further backing from the Chinese state to expand the market in its scope and scale.

Japan – Tokyo inflation rate pulled back more than expected in November in a welcome news to the central bank that remains reluctant to review current expansionary monetary policy.

• Tokyo prices are a leading indicator of the national trend and suggest that the nation’s price growth also moderated last month, Bloomberg reports.
• Tokyo CPI (%yoy): 2.6 v 3.2 October (revised from 3.3) and 3.0 est.
• Tokyo CPI ex Fresh Food and Energy (%yoy): 3.6 v 3.8 October and 3.7 est.

UK – The government is planning to implement a series measures to bring down record net migration ahead of expected general elections next year.

• Under the current plan, people coming to the UK will need to earn at least £38.7k pa, up from £26.2k, while care workers will be banned from bringin in dependants from next April.
• The initiative is estimated to reduce immigration by 300k people pa.

Australia – The central bank kept rates unchanged at 4.35%, in line with expectations, amid cooling inflation and softening labour market.

• “Higher interest rates are working to establish a more sustainable balance between aggregate supply and demand… holding the cash rate steady at this meeting will allow time to assess the impact of the increases in interest rates on demand, inflation and the labor market,” Goernor Michele Bullock said.
• Markets cut estimates for a next hike by 10pp to 30% post announcement with the currency pulling back 0.6%.

Currencies

US$1.0818/eur vs 1.0866/eur previous. Yen 146.81/$ vs 146.86/$. SAr 18.833/$ vs 18.701/$. $1.262/gbp vs $1.267/gbp. 0.658/aud vs 0.664/aud. CNY 7.144/$ vs 7.137/$.

Dollar Index 103.73 vs 103.38 previous.

Commodity News

Precious metals:

Gold US$2,037/oz vs US$2,068/oz previous

Gold ETFs 85.8moz vs 85.9moz previous

Platinum US$914/oz vs US$928/oz previous

Palladium US$979/oz vs US$984/oz previous

Silver US$24.52/oz vs US$25/oz previous

Rhodium US$4,400/oz vs US$4,400/oz previous

Base metals:

Copper US$ 8,399/t vs US$8,495/t previous

Aluminium US$ 2,171/t vs US$2,190/t previous

Nickel US$ 16,375/t vs US$16,495/t previous

Zinc US$ 2,425/t vs US$2,483/t previous

Lead US$ 2,080/t vs US$2,120/t previous

Tin US$ 23,775/t vs US$23,800/t previous

Energy:

Oil US$78.7/bbl vs US$77.9/bbl previous

Natural Gas €39.1/MWh vs €42.1/MWh previous

Uranium UXC US$81.0/lb vs US$80.3/lb previous

Bulk:

Iron Ore 62% Fe Spot (cfr Tianjin) US$129.8/t vs US$130.5/t

Chinese steel rebar 25mm US$577.7/t vs US$578.4/t

Thermal coal (1st year forward cif ARA) US$111.5/t vs US$113.8/t

Thermal coal swap Australia FOB US$135.5/t vs US$134.0/t

Coking coal swap Australia FOB US$322.0/t vs US$322.0/t

Other:

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

NdPr Rare Earth Oxide (China) US$66,204/t vs US$66,269/t

Lithium carbonate 99% (China) US$13,367/t vs US$14,080/t

China Spodumene Li2O 6%min CIF US$1,410/t vs US$1,440/t

Ferro-Manganese European Mn78% min US$1,038/t vs US$1,043/t

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

China Graphite Flake -194 FOB US$620/t vs US$620/t

Europe Vanadium Pentoxide 98% 6.1/lb vs US$6.1/lb

Europe Ferro-Vanadium 80% 25.25/kg vs US$25.25/kg

China Ilmenite Concentrate TiO2 US$314/t vs US$315/t

Spot CO2 Emissions EUA Price US$75.3/t vs US$75.7/t

Brazil Potash CFR Granular Spot US$325.0/t vs US$325.0/t

EV & Battery news

Toyota and Honda cut ICE vehicle production in China amid weak sales

• The two automakers announced cutbacks to production in China over the weekend.
• Honda will dismiss around 900 contract workers at a JV in China, around 7% of the workforce at the venture.
• Toyota has halted production on some of its older production lines at one of its JVs in China due to weakening sales figures.
• News services in Japan reported that Toyota, the world’s largest automaker by sales was suspending some production as part of a major production adjustment in response to weak sales of gasoline-engine cars.
• The rapid surge in EV sales in China has seen demand for ICE vehicles on the decline so automakers are having to reassess production plans.

South Africa to produce first EV in 2026 as green transport transition plans announced

• The electrification of transport is key to South Africa’s Just Energy Transition (JET) plan for a low-carbon and climate-resilient economy.
• The JET plan estimates that an investment of $6.84bn will be needed from 2023–2027 for the transport sector to contribute to South Africa’s decarbonisation commitments.
• SA is the largest automotive hub in Africa and is highly integrated in the global supply chain.

Toyota to expand battery EV line-up across Europe

• The Japanese automaker will seek to expand its European line-up to six models by 2026.
• It predicts that EVs will account for 20% of new car sales in the region by this time.
• In a statement Toyota expects to sell more than 250,000 EVs annually in Europe, and 1.5m globally by 2026.

NIO buys factory assets from long-term manufacturing partner JAC

• Anhui Jianghuai Automobile Group (JAC) have sold three asset packages, with Nio purchasing two from their manufacturing partner.
• The two asset packages were purchased for around $442m and include the inventory, fixed assets and structures from JAC’s passenger car company.
• Media outlets in China had reported that Nio could acquire the assets as it seeks its own EV production status in China.

Company News

Andrada Mining (ATM LN) 5.6p, Mkt cap £87m – Lithium Ridge exploration samples produce battery grade spodumene concentrate

• Andrada Mining reports that laboratory scale flotation tests on exploration samples of pegmatite from its Lithium Ridge project in Namibia have produced high grade spodumene concentrates grading 6.8% Li₂O -equivalent to 75% spodumene.
• The company says that the two samples, containing around 15% spodumene came from different pegmatite structures and were from drill-hole chippings and that the tests recovered 76% of the Li₂O and 80% of the spodumene.
• Lithium Ridge is “a fully permitted mining licence located approximately 35 km southeast of the town of Uis and Andrada’s operating Uis Mine”.

• Andrada Mining’s CEO, Anthony Viljoen, said that the “test work produced battery-grade spodumene concentrate at very attractive lithium recoveries … [and he confirmed that] … based on these results, we will proceed with the next phase of exploration drilling, metallurgical test work and mineralogical characterisation. This will increase geological and metallurgical confidence as well as establish a maiden mineral resource estimate over Lithium Ridge”.

Conclusion: Successful laboratory-scale metallurgical tests of material from Lithium Ridge is encouraging Andrada Mining to proceed with further drilling and test-work aimed at generating a maiden mineral resource.

Anglesey Mining (AYM LN) 1.53p, Mkt Cap £6.4m – Assay results from Northern Copper Zone drilling expected in Q1 2024

• Anglesey Mining reports that its drillhole, NCZ-001, which started drilling to investigate the Northern Copper Zone at Parys Mountain on 27^th October with a target depth of 650m has reached a depth of 545m and is expected to be completed over the next week.
• The company says that initial geological logging “suggests that sulphide mineralisation within the Northern Copper Zone commenced at a downhole depth of around 350 metres, in-line with the Company’s modelled interpretation. Sulphides of varying amounts have been logged from 350 metres to the current depth”.
• Anglesey Mining explains that it expects to deliver the first samples for assay before Christmas and receive results during Q1 2024.
• Chief Executive, Jo Battershill, said that the results so far were encouraging in that they confirm “the geological model used to target the mineralised zones has been very accurate thus far”.
• He also said that “we are seeing a significant amount of quartz veins within the system that we have interpreted to be the Northern Copper Zone. These quartz veins contain encouraging amounts of chalcopyrite, sphalerite, and galena – the key minerals that host copper, zinc and lead”.
• He explained that the “current drilling program … [which is] … the first look at the deposit for many years … has been designed to infill some of the upper levels of the Northern Copper Zone to potentially upgrade the resource categorisation from Inferred to Indicated  … [allowing] … the Northern Copper Zone to be included in the planned Pre-Feasibility Study and potentially lead to an optimised development scenario relative to that proposed in the 2021 Preliminary Economic Assessment”.
• He also expressed the view that Anglesey Mining believes that “the Northern Copper Zone to be accessed significantly quicker than envisaged in the PEA, which would bring meaningful levels of copper into the revenue stream much earlier than currently modelled”.

Conclusion: Drilling at the Northern Copper Zone at Parys Mountain is confirming Anglesey Mining’s geological model. As the first hole approaches its planned target depth assays should be available in Q1 2024 providing definitive evidence of whether the expected geology hosts economically viable grades.

CAA Mining* (Private) – 30p, Implied Mkt cap £7.14m.  Drilling highlights albitised spodumene in pegmatite zones along strike of the 3km trend on the Abasaa prospect with another two trends to be tested

CLICK LINK FOR FLASHNOTE

• CAA Mining are making rapid progress in drilling pegmatite targets close to the coast at the Salt Pond-Makessim lithium project in Ghana
• Drilling: GTS’ multipurpose rig is drilling around 200m a day with four, reverse circulation, holes completed so far.
• Samples show of 10-50m est. true-width sections of pegmatite some containing albitised spodumene.
• The rig is currently drilling a 3km trend where sampling previously showed 0.3% Li in the pegmatite surface rock chips.
• Assays: >200 assay samples are being transported from the rig by SGS to their sample preparation lab in Tarkwa before shipment to South Africa for further analysis.
• CAA Mining have established a local laboratory for rapid LIBS and pXRF analysis for lithium and it’s pathfinder elements, though the LIBS analyser is currently being serviced.
• Exploration: The team have conducted a comprehensive range of auger drilling and soil sampling to work up nine targets for drilling.
• Two pegmatites have been picked up on either side of the Eduakron trend with pXRF analysis on the RC rock chips showing lithium pathfinder minerals of Rb, Nb and Sn.

• Licenses: CAA Mining have been granted and now hold five lithium licenses in the SaltPond area covering 566 sqkm.
• Petrographic analysis of rock chip samples identified:

• 1. Spodumene 10% – Lath-shaped lepidolite with albite and spodumene sandwiched between quartz grains chip samples,
  2. Spodumene 45% – large well-formed crystals of microcline and spodumene and these crystals are highly fractured with the spodumene filling the cracks in the microcline.
  3. Spodumene 25% – with long tabular grains of spodumene
  4. Spodumene 50% – large equant to long bladed crystals of spodumene are intergrown with quartz and sometimes has embedded sigmoidal to equant quartz grains.
  5. Spodumene 55% – highly altered and only slightly fractured with tiny flakes of muscovite grains particularly distributed in the spodumene and albite
  6. Spodumene 75% – .very large crystals of spodumene are intergrown with albite

• Management is led by Douglas Chikohora, a geologist who formerly worked for Cluff Resources which was acquired by Ashanti Goldfields in 1995 and then for Cluff Gold which was acquired by Persius Mining in 2013.
• Douglas is well acquainted with the workings of the Minerals Commission and supported by Will Slack and Dr John Arthur (ex. SRK) who recently stepped away from a board role.
• Funding: The Lowell fund, Australia, is supporting funding
• The MIIF Sovereign wealth fund has expressed potential interest in investing in CAA Mining.
• A major mining company recently visited the pegmatite outcrops and other exploration.
• CAA Mining has spent around £4m on the establishment of local infrastructure and licenses in Ghana.
• Livista Ghana: CAA Mining also hold shares in Livista Ghana, the lithium refinery company which is in planning for a lithium refinery in Germany and is considering a site for lithium processing in Ghana.
• CAA Mining hold 10% of Livista Ghana. Livista hold around 7% of CAA Mining.
• Cash: CAA Mining currently have around £0.5m of cash in the bank following the raising of £1.3m at 30p/s principally from one existing shareholder.
• US$200k has been deposited with the driller towards the planned 5k metres of RC drilling.Gold: The company also holds an option over a gold project with a 276koz resource.
• The Ghana government recently granted a full mining exploitation license to Atlantic Lithium* (ALL LN) for the development of the Ewoyaa lithium mine.
• Peer Group: (see table at back of note) The average Proven and Probable resource in our SP Angel peer group table is 22.1mt grading 1.19% Li2O.
• This doubles to 44.1mt in the Measured, Inferred and Indicates category at 1.18%.
• The average lithium mining project in our peer group produces around 374,000tpa of Spodumene concentrate equating to 47,000tpa of Lithium Carbonate equivalent.
• Capex averages $336m with Opex of $481/t FOB.

Conclusion: Reports from the field indicate the GTS rig is potentially drilling into a central pegmatite dome from which surrounding pegmatite dykes have emanated.

*Two SP Angel mining analysts have visited CAA’s exploration licenses. As a private company, CAA Mining is considered higher risk and unsuitable for most retail investors.

* SP Angel acts for CAA Mining. SP Angel analysts and staff hold CAA Mining shares.

Chaarat Gold (CGH LN) 6p, Mkt Cap £42m – £1.8m equity raise

• The Company issued £1.8m in new equity at 5.25p to progress development of its gold assets in the Kyrgyz Republic.
• The total is comprised of £1.1m in fresh capital and £0.7m in conversion of the existing US$5m working capital facility owed to Labro Investments, the largest shareholder in the Company and majority owned by Martin Andersson, the executive Chairman of the Company.
• Only $2m has been drawn under the loan facility so far.
• The placing price represents a ~28% discount to the closing price on Monday.
• New money will support the Company as the team is continuing Tulkubash funding discussions targeted for completion in H1/24.

Condor Gold* (CNR LN) 14.75p, Mkt Cap £26m – Progress report on sale process

(Condor Resources holds 100% of the La India gold mining project)

CLICK FOR PDF

• Condor Gold has provided a progress report on the proposed sale of its assets in Nicaragua which was announced in November 2022.
• The assets are centred on the La India project where the company has a fully permitted development project and an ‘Indicated’ mineral resource totalling over 1moz of gold with a further resource of over 1moz classed as ‘Inferred’ as well as important potential to add resources through further exploration.
• The company confirms that it has executed 8 non-disclosure agreements and that it has received 5 non-binding offers from potential purchasers and “is in advanced discussions with 2 gold producers”.
• CEO, Mark Child, confirmed that although the “sales process is taking longer than anticipated … the Board is anticipating that further progress will be made in the New Year”.
• Today’s announcement also discloses that the company has received an additional £1m as a result of the exercise of warrants over approximately 6.7m shares to be issued at 15p/share.  The warrants are held by Galloway Limited “a company wholly owned by Burnbrae Group Limited which is, in turn, wholly owned by Jim Mellon, Condor’s Chairman”.
• Commenting on what he described as an impressive “asset sale process” Mr. Mellon explained that “My investment of a further £1M is designed to ensure sufficient financial runway during the sales process until a desired price is achieved”.
• Mr. Child explained the scarcity value of “fully permitted, construction ready gold mines with potential production of 150,000 oz gold per annum, in major Gold Districts” and confirmed that “none of the non-binding offers have progressed to firm proposals to date, the Company is in advanced discussions with 2 gold producers” and expressed optimism of further progress in 2024.

Conclusion: Condor Gold’s sale of its assets in Nicaragua is proving to be a protracted process but with additional funding available from the exercise of warrants by the company’s Chairman it remains optimistic on the prospects of completing the process in the New Year.

*SP Angel acts as a broker to Condor Gold

Evolution Mining (EVN AU) A$4.14, Mkt Cap A$7.6bn – Evolution to acquire CMOC’s stake in Northparkes copper-gold mine, New South Wales

• Evolution will take an 80% stake in Northparkes Copper-Gold mine in New South Wales from Chinese operator CMOC.
• The Company will pay an upfront cash consideration of US$400m and a contingent consideration up to US$75m.
• China Moly note the consideration factors in US$756m pre-contingency enterprise value which values the Triple Flag stream liability at $356m using a long-term gold price of A$2,650/oz.
• Evolution will fund the transaction partially by a A$525m placement, alongside an additional A$200m 5-year Term Debt Facility.
• Northparkes is expected to produce 25kt Cu next year alongside 38koz Au on an 80% attributable basis to operator.
• However, Triple Flag currently holds a streaming agreement on the asset, taking 67.5% of CMOC’s payable gold and 100% of CMOC’s payable silver share.
• Northparkes holds in Resources 527mt at 0.55% Cu, 0.19g/t Au and 1.87g/t Ag. Reserves stand at 101.4mt at 0.53% Cu, 0.27g/t Au and 1.87g/t Ag.
• CMOC’s subsidiary trading house IXM will continue to buy copper concentrates from the project as part of an offtake agreement.
• Sumitomo will retain their 20% interest in the Northparkes JV.

Conclusion: This seems like a good deal for CMOC given the large overhang of the Triple Flag streaming liability, which siphons off a significant portion of the project’s revenue. CMOC are offloading the asset in order to ‘crystalise value,’ support ‘other growth initiatives within the Company,’ and for ‘balance sheet optimization.’  Appetite for copper M&A continues to grow as the longer-term supply/demand picture for copper concentrate becomes increasingly attractive. The deal follows MMG’s acquisition of Khoemacau in Botswana and BHP’s acquisition of Oz Minerals for $6.4bn alongside the recent deal by Zambia for Mopani to UAE’s IRH.

Great Southern Copper (GSCU LN) 2.4p, Mkt Cap £6.7m – Scout drilling to start later this month at Especularita, Chile

• Great Southern Copper reports that, following the completion of permitting it expects to start a scout programme of reverse-circulation (RC) drilling at its Especularita project in Chile during the first half of December.
• The programme of 3-4 holes totalling 600-800m will focus on the Abundante mine prospect targeting “outcropping high-grade Cu mineralisation associated with a tourmaline breccia-pipe”.
• Rock chip sampling “from the exposed mine walls and mine dump material” at Abundante “have returned assay grades up to 3.39% Cu and 0.15g/t Au”.
• The company says that “Artisanal mining at Abundante is reported by local miners to have reached depths of approx. 45m below surface and the GSC scout holes will test below that depth on the hanging wall side of … a NNE-trending normal fault which is mapped in the pit wall and interpreted to have potentially truncated the deposit”.
• In addition, Great Southern Copper will also target “a prominent “bullseye” magnetic low anomaly identified in the recent drone magnetics survey… located to the east side of the interpreted normal fault”.
• CEO, Sam Garrett, said that the scout drilling would be “the first step in understanding how the breccia-hosted mineralisation will develop at depth beneath the existing mine workings. The results will provide critical geological, geochemical and structural information necessary for the preparation of follow-up larger-scale drill programmes designed to vector in on potential economic mineralisation”.

Rainbow Rare Earths (RBW LN) 15.75p, Mkt cap £93m – Proposed $50m TechMet option to be funded by US DFC

• Rainbow Rare Earths report further details on the proposed $50m investment via TechMet as previously reported on 8^th November.
• The proposed $50m investment will be funded by the US DFC ‘International Development Finance Corporation’ via TechMet which will hold the DFC stake in the Phalaborwa project.
• Rare earth mineral supply is a focus for the DFC with the four rare earths to be produced at Phalaborwa, neodymium, praseodymium, dysprosium and terbium, designated as critical minerals.
• TechMet will take a direct ownership stake at the Phalaborwa project level in accordance with the NPV vale to be set out in the DFS on the agreed formula.
• The equity stake will be 15-33% underpinning a project equity valuation of US$151.5-333.3m.
• Rainbow recently placed an additional 30m shares at 15p/share to raise £4.5m before expenses on 27^th September.

Savannah Resources* (SAV LN) 2.3p, Mkt Cap £42m – Barroso fieldwork progresses at pace

BUY – 21.1p

• The Company updated on the progress of its fieldwork at the Barroso Lithium Project, Portugal.
• Drillers completed 24 holes (~1,500m) of the planned 60 (~3,200m) under the 2023/24 programme.
• Four drilling rigs are turning at site engaged in infill, hydrogeological, metallurgical and geotechnical drilling.
• The team is planning to release resource updates on a deposit by deposit basis starting from Q1/24 with work at NOA completed and rigs now working at Reservatorio.
• In parallel, environmental and social impact assessment is also moving forward with engaged consultants reported to have conducted ~400 interviews with local communities and stakeholders involved.
• Project timeline reiterated with DFS and permitting to be completed in H2/24.
• The Company confirmed its readiness to cooperate fully with public prosecutors regarding previously reported government officials’ corruption case and reported that no further engagement took place since the searches conducted on 7 November.
• Strategic partnership discussions are ongoing.

Conclusion: It is encouraging to see development activities at the Barroso Lithium Project continued at pace with infill drilling ongoing to feed into feasibility study. Drilling will also be used to collect metallurgical samples and geotechnical data to refine mining and processing schedules. FS and permitting timelines reiterated for completion in H2/24.

*SP Angel acts as Nomad and Broker to Savannah Resources

SolGold* (SOLG LN) 8.14p, Mkt Cap £240m – Exploration discovery at the La Florida prospect

• Solgold reports a new exploration discovery approximately 8km north of its Cascabel project in Ecuador where visible gold in veins associated with geological textures indicative of an epithermal ‘boiling-zone’ have been identified at the La Florida prospect located within the Cielito target area of the Blanc Nieves Project.
• The company says that La Florida, which lies around 3km northeast of Cileito, hosts “a 15m wide zone hosting epithermal quartz veins and a breccia outcrop in the intersection of NE and NW trending geologic structures … [with] … Grab samples from quartz veins within the outcrop have yielded encouraging assay results of up to 4.15 g/t Au and 3.35 g/t Ag”.
• Solgold also describes “results from rock samples have delivered remarkable values of up to 276 g/t Au and 141 g/t Ag, signalling the potential for another Au-Ag bonanza zone … [and speculates that the] … close proximity of the La Florida target to the Cielito target highlights a potential interconnection between these two significant areas”.
• Structural geological interpretations confirm the possibility of a link between the mineralisation at Cileito and La Florida and “Currently, our exploration efforts are focused on collecting rock-saw channel samples from the outcrop and the initiation of trenching to locate and sample the vein extensions at La Florida”.
• Solgold is “preparing the new target areas at La Florida for drilling, in alignment with a strategy centred around potential epithermal vein targets. This development aligns with plans to drill for extensions of the veins at Cielito and Quiroz, extending beyond the range of previous historic artisanal mining”.
• Commenting on the early-stage discovery at La Florida, Solgold’s founder and non-executive director, Nick Mather, expressed his enthusiasm for the project and its possible link to Cielito and said that “our exploration team will work diligently to define the extensions of the gold-silver quartz structure. Recent outcrop rock chip sampling has unveiled widespread surface gold and soil geochemical gold and silver, further confirming the Project’s extensive epithermal gold and silver precious metal field, covering an area exceeding 80 square kilometres”.

Conclusion: The discovery of high-grade epithermal gold mineralisation at surface at La Florida and a possible link to the Cielito prospect approximately 3km away is indicative of the scale of mineralising events close to Solgold’s Cascabel project area.  Although it is still an early-stage discovery at this stage, Solgold will be able to deploy the deep insights into the local geology acquired at Cascabel and elsewhere in Ecuador to accelerate its exploration and we look forward to further news as the programme develops.

*SP Angel acts as Financial Advisor to SolGold

No.1 in Copper:  “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”

No1. In Gold:  “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”

The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020

Analysts

John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490

Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484

Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474

Sales

Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472

Abigail Wayne – Abigail.Wayne@spangel.co.uk – 0203 470 0534

Rob Rees – Rob.Rees@spangel.co.uk – 0203 470 0535

Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

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

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.

Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SPA is registered in England and Wales with company number OC317049.  The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.

A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).

SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%

If anyone reads this article found it useful, helpful? Then please subscribe www.share-talk.com or follow SHARE TALK on our Twitter page for future updates. Terms of Website Use All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned

---