Copper prices steady in anticipation of Chinese market stimulus
MiFID II exempt information – see disclaimer below
Empire Metals* (EEE LN) – New technical team appointments to manage Pitfield Titanium Project development
Galantas Gold* (GAL LN) – Debt refinancing
Power Metal Resources* (POW LN) – Geochemical sampling grows Tati gold anomaly
| Dow Jones Industrials | -0.71% | at | 38,380 | |
| Nikkei 225 | -0.53% | at | 36,161 | |
| HK Hang Seng | +3.88% | at | 16,112 | |
| Shanghai Composite | +3.23% | at | 2,789 |
Economics
US – The gauge of services sector hit a four month high with inflation, employment and new orders sub-indices beating market estimates.
- The announcement added to pressures on equities and Treasuries fuelling speculation that the Fed will hold of tapering for longer.
- Strong inflation reading is attributed to a surge in ocean shipping costs amid the conflict in the Red Sea seeing carriers to reroute.
- ISM Services Index: 53.4 v 50.5 (revised from 50.6) December and 52.0 est.
Germany – Factory orders unexpectedly jump in December driven by a surge in aircraft purchases, although, the total for the year was down 5.9%.
- Airbus orders are reported to have come in at 807 aircraft in December, up from 112 in November.
- A number of other key sectors continued to suffer from falling demand with drops recorded in autos (-14.7%), chemicals (-3.7%), machinery and equipment (-5.3%).
- Despite a YE jump, manufacturing sector had a poor year with activity weighed down by strong inflation, weak overseas demand and high borrowing costs.
- Factory Orders (%mom): 8.9 v 0.0 (revised from 0.3) November and -0.2 est.
- Factory Orders (%yoy): 2.7 v -4.7 (revised from -4.4) November and -5.3 est.
South Africa mining lobby warns the government over freight-rail network crisis with coal mining companies reported to have transported record volumes of coal by truck to ports in 2023.
- Coal deliveries to ports on the nation’s freight-rail network fell to 30 year lows and iron ore shipments are at their lowest in a decade, Bloomberg reports.
- Using trucks drive shipment timing and cost up as well as challenges road infrastructure.
Currencies
US$1.0753/eur vs 1.0782/eur previous. Yen 148.59/$ vs 148.48/$. SAr 18.979/$ vs 18.947/$. $1.256/gbp vs $1.262/gbp. 0.650/aud vs 0.651/aud. CNY 7.193/$ vs 7.198/$.
Dollar Index 104.33 vs 104.01 previous.
Commodity News
Iron ore prices hit a three month low ahead of the upcoming Lunar New Year and ongoing property market crisis.
- The property sector continues to face liquidity pressures with more than 1,000 projects in 25 cities looking for CNY 373bn (US$52bn) in funding, according to Bloomberg estimates.
- Iron ore prices follow Chinese steel prices with rebar futures and hot rolled coil in Shanghai both touching the lowest intraday levels since November.
Chinese lithium imports continued to grow in 2023, albeit, at a reduced pace as the nation ramps up EV production capacity, according to BNEF estimates.
- The nation imported 158.7kt (LCE) of lithium carbonate last year, marking a 17%yoy compared to 68%yoy growth reported in 2022.
- Exports amounted to 114.4kt (LCE) in the form of lithium hydroxide, climbing 39%yoy compared to a 27% increase the previous year.
Precious metals:
Gold US$2,026/oz vs US$2,024/oz previous
Gold ETFs 83.8moz vs 83.9moz previous
Platinum US$906/oz vs US$894/oz previous
Palladium US$964/oz vs US$934/oz previous
Silver US$22.37/oz vs US$22/oz previous
Rhodium US$4,450/oz vs US$4,450/oz previous
Base metals:
Copper US$ 8,401/t vs US$8,443/t previous
Aluminium US$ 2,218/t vs US$2,226/t previous
Nickel US$ 16,005/t vs US$16,145/t previous
Zinc US$ 2,433/t vs US$2,434/t previous
Lead US$ 2,127/t vs US$2,133/t previous
Tin US$ 25,005/t vs US$25,100/t previous
Energy:
Oil US$78.2/bbl vs US$77.5/bbl previous
- The German Government plans to invest €15-20bn on four short-term tenders for up to 10GW of natural gas-fired power plants, which are required to upgrade to burn hydrogen sometime between 2035 and 2040.
- BP joined its IOC peers in beating consensus expectations despite lower y/y margins and commodity prices, as the new CEO also committed the Company to an ongoing transition to a low carbon energy company.
Natural Gas €27.8/MWh vs €29.8/MWh previous
Uranium Futures $105.3/lb vs $106.3/lb previous
Bulk:
Iron Ore 62% Fe Spot (cfr Tianjin) US$126.3/t vs US$125.8/t
Chinese steel rebar 25mm US$570.1/t vs US$569.6/t
Thermal coal (1st year forward cif ARA) US$94.8/t vs US$93.8/t
Thermal coal swap Australia FOB US$121.5/t vs US$119.0/t
Coking coal swap Australia FOB US$309.0/t vs US$309.0/t
Other:
Cobalt LME 3m US$29,135/t vs US$29,135/t
NdPr Rare Earth Oxide (China) US$55,474/t vs US$55,434/t
Lithium carbonate 99% (China) US$12,304/t vs US$12,295/t
China Spodumene Li2O 6%min CIF US$1,000/t vs US$1,000/t
Ferro-Manganese European Mn78% min US$1,059/t vs US$1,062/t
China Tungsten APT 88.5% FOB US$305/mtu vs US$305/mtu
China Graphite Flake -194 FOB US$575/t vs US$580/t
Europe Vanadium Pentoxide 98% 5.8/lb vs US$5.8/lb
Europe Ferro-Vanadium 80% 27.55/kg vs US$27.85/kg
China Ilmenite Concentrate TiO2 US$320/t vs US$320/t
Spot CO2 Emissions EUA Price US$66.3/t vs US$66.4/t
Brazil Potash CFR Granular Spot US$292.5/t vs US$292.5/t
Battery News
Hyundai to explore $3bn IPO for Indian unit
- Hyundai Motor India is looking to list to raise $3bn in what would be India’s biggest IPO.
- The company is in early talks for an IPO and has held discussions with several banks, according to two people in the know. (Reuters)
- Hyundai is the second-biggest automaker in India with a 15% market share and the fund raising would value its Indian operation at up to $30bn
UK sees registration of millionth battery EV
- According to the Society of Motor Manufacturers and Traders (SMMT), the millionth battery EV has been registered in the UK.
- Only around 674,000 pure battery EVs were licensed for use in the UK by the end of 2022.
- SMMT expect battery EVs to account for 20% of all vehicles registered in the UK this year, in line with the governments zero emission mandate that requires 22% of vehicles sold by manufacturers to be zero emission.
Revidium Australia to collaborate on €40m Li-ion battery recycling plant in Romania
- The consortium formed by Redivium Australia, Romanian recycling company Ecowes and Romania’s National Battery Recycling System Association (SNRB) will team up to carry out a feasibility study to implement a facility in Romania recycling lithium-ion batteries with an initial capacity of 10t per day.
- The plant will use Revidium’s recycling technology that has already had success in Germany, the UK and Serbia.
Company News
Empire Metals* (EEE LN) 10.0p, Mkt Cap £62m – New technical team appointments to manage Pitfield Titanium Project development
(Empire holds 70% of Pitfield, Century Minerals, which is run by two geologists holds the other 30%. One of these geologists works for Empire.)
- The Company announces a number of new appointments to join its technical team to progress the flagship Pitfield Titanium Project in WA.
- Narelle Marriott is joining as Process Development Manager to lead a team of metallurgists and engineers for Pitfield project development.
- Ms Marriott will oversee metallurgical testwork, processing flowsheet design and demonstration plant development.
- Ms Marriott is a graduate of the University of Queensland (BEng Minerals Process) with over 20 years’ experience having been involved with multiple commodities including nickel, uranium, iron ore and rare earths.
- She worked for BHP rising to Senior Process Engineer followed by roles with Greenland Minerals & Energy and Hastings Technology Metals.
- She starts on the 11th of March.
- In addition, the Company engaged two senior titanium industry technical consultants strengthening the team’s development and execution capacity.
- Dr Trevor Nicholson holds a PhD in Mineral Process Engineering from the University of Queensland having been involved with the WA mineral sands industry since 1987.
- Dr Nicholson had a 36-year career with a focus on project management and process engineering having been involved with a number of key players in the space (Tronox, Iluka, Lomon Billions, TiZir Titanium, Bluejay, Alcoa Australia among many others).
- Eugene Dardengo is an experienced metallurgist and operations manager with over three decades of experience in the Australia mining and mineral industry.
- He has held a number of diverse roles with companies such as Hamersley Iron (Rio Tinto), the Readings Group of Companies and Tiwest (Tronox).
Conclusion: The Company signs up new technical talent as the team is progressing towards metallurgical workstreams and optimal processing flowsheet design at the Pitfield Titanium Project.
*SP Angel acts as nomad and broker to Empire Metals
Galantas Gold* (GAL LN) 10.1p, Mkt Cap £12m – Debt refinancing
- The Company complete a previously announced debt refinancing with Ocean Partners UK.
- The Company issued US$2.7m worth of unsecured convertible debentures replacing US$2.7m owed to Ocean Partners.
- Terms of new instruments is mostly the same as unsecured convertible debentures issued in December last year.
- In December, the team raised US$2.6m issuing unsecured convertibles (~20p conversion price, maturing in three years, 10% coupon with a link to gold prices).
- As of latest set of accounts (Sep/23), the Company had C$12.4m net debt position including C$13.0m in outstanding debt, C$11.4m of which was due over the next 12 months, split roughly equally between G&F Phelps and Ocean Partners.
Conclusion: The refinancing helps to extend maturity of US$2.7m worth of debt owed to Ocean Partners as the team progresses its portfolio of gold and base metals projects in Ireland and Scotland.
*SP Angel acts as Broker to Galantas Gold
Power Metal Resources* (POW LN) 1.1p, Mkt Cap £24m – Geochemical sampling grows Tati gold anomaly
- The Company released results of the 2023 geochemical soil sampling at the 100% owned Tati Gold Project in Botswana.
- Assay results confirm the presence of three significant gold in soil geochemical anomalies within the 8km long gold trend extending NW-SE through Tati.
- Three areas returning anomalous values are Cherished Hope (CH), Northwest Anomaly and Southwest Anomaly.
- Of the total 446 samples collected, 29 returned values of 100bbp and above with the vast majority coming from the CH Anomaly.
- Individual samples reached up to 568ppb, 831ppb and 1,076ppb readings at CH Anomaly, a now greater than 600-wide area that remains open in multiple directions.
- The CH Anomaly represents a southwest extension to the original Cherished Hope historical mine where drilling by Power in 2022 returned 3m at 16.77g/t from 5m (including 1m at 47.17g/t) in hole CHRC0003 as well as 2m at 23.17g/t from 25m (incl. 1m at 40.63g/t Au) in hole CHRC0006.
- The SW and NW anomalies are located ~1,500m and 3,000m from the CH Anomaly that subject to further infill sampling work may potentially significantly expand the scale of the gold anomaly.
- Separately, the Company is continuing discussions with potential partners regarding the potential for small scale mining at the Cherished Hope Gold Mine, in parallel with ongoing exploration programme.
*SP Angel acts as Nomad and Broker for Power Metal Resources
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
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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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