SP Angel Morning View -Today’s Market View, Tuesday 9th July 2024

Copper prices edge higher ahead of Fed comment on rate cuts

MiFID II exempt information – see disclaimer below

Cora Gold (CORA LN) – Reconnaissance drilling results at Madina Foulbe

Goldstone Resources* (GRL LN) – Production guided to grow to 1kozpm with expansion of HL operations (corrected)

Guardian Metal Resources (Formerly Golden Metal Resources) (GMET LN) – Investigating garnet potential at Pilot Mountain

Power Metals Resources* (POW LN) (Power Metals* holds a 51% stake in Golden Metal Resources)

Ivanhoe Mines (IVN CN) – Q2 Production results as Phase 3 concentrator ramps up

KEFI Gold and Copper* (KEFI LN) – Amendments to management bonus plan

Lundin Gold (LUG CN) – Q2 Production results as throughput improves on debottlenecking

Orion Minerals  (ORN AU) – Copper assays from Okiep, South Africa

Premier African Minerals (PREM LN) – Progress report on the Zulu lithium project.

Strategic Minerals* (SML LN) – Record Q2 magnetite sales from Cobre prompt guidance for >US$4m 2024 sales

Copper ($9,950/oz) ticks up as Codelco looks to boost production

• Copper prices are little changed this week, hovering just below $10,000/t.
• Codelco provided an update, suggesting output was sustained despite suffering the wettest June in two decades.
• The Chilean copper giant is targeting a return to 1.7mtpa of Cu production in 2030.
• China’s Minmetals is eying a new copper railway in Peru to support Las Bambas’ access to a new port.
• China’s June copper output rose above expectations to 1.005mt in June, up 9.5% yoy.
• Bloomberg reports that Chinese smelters have been able to offset losses on TCRCs via higher sulfuric acid by product sales.

Gold ($2,361/oz) holds steady before Powell today and CPI Thursday

• Gold prices have eased from Friday highs at $2,391/oz, settling around the $2,360/oz mark.
• Fed Char Powell is set to speak today in front of Congress, with lawmakers set to eke out clues on potential rate cuts going forward.
• The market currently prices in two rate cuts this year, with 70% chance of a cut in September.
• The 10 year yield has fallen below 4.3% again, settling at 4.29% in a boost to gold prices.
• Focus will be on Thursday’s CPI report, with economists expecting a 0.2% rise in June, the lowest rise since August.
• However, the Fed’s primary focus will be on the labour market, with any cracks in hiring expected to boost calls for rate cuts.
• ETFs have been boosting gold holdings, stepping in as a key buyer as China sits out of the market for the second subsequent month.
• ETFs bought 188koz of gold yesterday, reducing net sales for 2024 to 4.1moz.
• Holdings have grown for the past five straight days as US Treasuries rallied.

Iron ore weakens as Brazilian exports remain elevated and pessimism persists in China

• 62% China fine index has fallen to $108/t as port inventories in China climb to two-year highs.
• Brazil has been ramping up shipments to 1.66mt a day over the first 20 days of June, a boost on the 1.52mt a day in 2023 and 1.53mt a day in May.
• China’s Third Plenum next week is expected to guide traders on potential stimulus, with the property market weighing on steel demand.
• Analysts suggest the potential for the CCP to ramp up housing support programmes and provide tax reforms to support local governments.

China’s Shandong province plans $14bn lithium battery industry by 2025

• The province of Shandong plans to develop a $13.8bn lithium battery industry by 2025 with an industrial chain covering electrode materials, electrolytes, battery cells, and assembly.
• The plan includes expanding consumer battery categories, improving quality and performance, and strengthening R&D.
• The authorities will support Jinan and Qingdao in developing companies for raw material production and battery assembly for regional new energy vehicle manufacturers.
• Cities like Zaozhuang and Jining will receive support for lithium battery manufacturing and energy storage projects.
• The development of the lithium battery industry is expected to drive economic growth in the region.

Economics

US – S&P 500 recorded the longest winning streak in more than five months with its fourth record close on Monday.

• Equity futures extended gains this morning ahead of a semiannual monetary policy address by Jerome Powell to the Co.
• Markets are pricing in two rate cuts this year with a ~70% chance for the first once in September.

China – Guangzhou RF Properties, a troubled Chinese developer, received a winding up petition from a creditor, according to FT.

• The petition was filed by Seatown Private Credit master Fund regarding an outstanding loan of $614m in principle and interest.

Third plenum starts next Monday running from the 15-18^th.

• The plenum will focus on studying further comprehensive deepening of reforms and advancing Chinese-style modernisation. (Geostrategu.org.uk)
  • The plenum is delayed probably due to ‘intrinsic difficulties of the reform agenda’.
  • The CCP has been unable to implement ‘comprehensively’ much of its 2013 agenda with senior Chinese officials continue to underline the inadequate implementation of the 2013 reforms and the need for renewed efforts:
  • The economy is the No 1 priority for the party and government, and matters have come to a point that only real reforms, not piecemeal adjustments, can secure future growth. Some hard reforms are yet to be carried out and others are so controversial that there are not yet any implementation plans for them.5
  • That is the assessment of Yang Weimin. Yang is now the Deputy Director General of the China Centre for International Economic Exchange, a top government-affiliated think tank. In the past he was a long-term aide to Liu He, who was director of the Office serving the Central Financial and Economic Affairs Commission from 2013 to 2023.

Heavy rains in China hit farmland in Henan and Shandong.

• Over 6,000 people were evacuated after beach in dyke at Dongting Lake with more rain forecast. Emergency repairs to breach are said to be holding.
• The Miluo River in Hunan has risen to its highest level in 70 years with flooding affecting >364,000 people, damaging farmland and causing multiple mudslides.

UK – PRC Premier, Li Qiang, congratulated Keir Starmer on his election win in the Peoples Daily yesterday

• China is looking to expand its export markets, particularly for EVs and for new manufacturing bases in the West for greater international reach.
  • The US has 100% tariffs on Chinese EVs prompting Chinese companies to set up in Mexico.
  • Europe proposed 37.6% tariffs on EV imports from China on Friday
• It will be interesting to see how the Labour government balances the protection of automotive manufacturing in the UK with the ‘green & clean’ agenda alongside welcoming Chinese EV imports and their manufacturers.

Value of retail sales unexpectedly contracted in June amid poor weather, according to BRC data.

• Hopefully, sunnier weather and the Euros related spending with England going though into semi finals would lift the activity in July.
• “Retailers remain hopeful that as the summer social season gets into full swing and the weather improves, sales will follow suit,” BRC said.
• BRC Sales (%yoy, Jun/May/Est): -0.5/0.4/0.8

Ukraine/Russia – Russia launched the deadliest air strike in months on Monday that claimed 41 lives across Ukraine,

• Nearly 200 people are reported to have been injured.
• Ukrainian air defences shot down 30 of 28 incoming missiles, according to official statements.
• Missiles hit infrastructure, commercial and residential buildings including the main children’s hospital in Kyiv.

Currencies

US$1.0824/eur vs 1.0831/eur previous. Yen 160.87/$ vs 160.79/$. SAr 18.080/$ vs 18.143/$. $1.281/gbp vs $1.281/gbp. 0.674/aud vs 0.675/aud. CNY 7.272/$ vs 7.270/$.

Dollar Index 105.02 vs 104.97 previous.

Precious metals:         

Gold US$2,359/oz vs US$2,381/oz previous

Gold ETFs 81.5moz vs 81.3moz previous

Platinum US$1,005/oz vs US$1,016/oz previous

Palladium US$1,019/oz vs US$1,005/oz previous

Silver US$31.00/oz vs US$31/oz previous

Rhodium US$4,650/oz vs US$4,650/oz previous         

Base metals:   

Copper US$ 9,940/t vs US$9,900/t previous

Aluminium US$ 2,532/t vs US$2,534/t previous

Nickel US$ 17,325/t vs US$17,440/t previous

Zinc US$ 2,962/t vs US$2,976/t previous

Lead US$ 2,225/t vs US$2,230/t previous

Tin US$ 34,370/t vs US$33,885/t previous

Energy:           

Oil US$85.5/bbl vs US$86.2/bbl previous

Natural Gas €32.2/MWh vs €33.3/MWh previous

Uranium Futures $85.5/lb vs $85.5/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$108.2/t vs US$110.3/t

Chinese steel rebar 25mm US$515.5/t vs US$516.1/t

Thermal coal (1st year forward cif ARA) US$112.9/t vs US$116.5/t

Thermal coal swap Australia FOB US$135.0/t vs US$135.5/t

Coking coal Dalian Exchange futures price US$215/t vs US$213.8/t           

Other:  

Cobalt LME 3m US$27,150/t vs US$27,150/t

NdPr Rare Earth Oxide (China) US$49,575/t vs US$49,453/t

Lithium carbonate 99% (China) US$12,033/t vs US$12,036/t

China Spodumene Li2O 6%min CIF US$1,010/t vs US$1,010/t

Ferro-Manganese European Mn78% min US$995/t vs US$995/t

China Tungsten APT 88.5% FOB US$340/mtu vs US$340/mtu

China Graphite Flake -194 FOB US$470/t vs US$470/t

Europe Vanadium Pentoxide 98% 5.1/lb vs US$5.1/lb

Europe Ferro-Vanadium 80% 26.75/kg vs US$26.75/kg

China Ilmenite Concentrate TiO2 US$313/t vs US$313/t

China Rutile Concentrate 95% TiO2 US$1,396/t vs US$1,396/t

Spot CO2 Emissions EUA Price US$69.6/t vs US$69.6/t

Brazil Potash CFR Granular Spot US$307.5/t vs US$307.5/t

Battery News

EV drives to pay full congestion charge in London at end of 2025

• EV drivers in London will lose their discount on congestion charges starting December 25, 2025.
• Currently, EV users pay a £10 annual fee for exemption from the £15 daily congestion charge.
• Over 112,000 vehicles, including private hire vehicles, are currently registered for the discount.
• The Federation of Small Businesses criticised the move, urging the extension of the scheme to support those who invested in EVs.
• Oliver Lord from Clean Cities expressed concern that the lack of incentives might lead to a return to non-electric vehicles.
• The last day for EV users to benefit from the discount will be December 24, 2024, with the first full-charge day being January 2, 2026.

Mercedes-Benz slows battery plans amid lower EV demand

• Mercedes-Benz will wait to see if EV demand picks up before expanding battery cell capacity.
• Lower projected EV sales mean the company no longer needs the initially planned capacity for 2030.
• The company now expects EVs, including hybrids, to make up to 50% of total sales by 2030, five years later than previously forecasted.
• Plans to build additional ACC plants in Germany and Italy were paused due to low EV demand.
• Despite lower EV demand, Mercedes-Benz continues to invest in electrifying its product lineup and modernizing combustion engines to meet emissions regulations.
• The company is developing lithium-ion cells with high-energy anodes, cobalt-free cathodes, and solid-state technology to enhance energy density, driving range, and charging speed.

EV maker Lucid beats quarterly deliveries estimate helped by price cuts

• Lucid Group reported second-quarter deliveries above market expectations, aided by price cuts for its luxury electric sedans.
• Lucid shares rose about 4% after the announcement on Monday.
• The EV startup produced 3,838 vehicles in the first half of 2024 and aims to produce more than 5,162 cars in the second half to meet its annual forecast of 9,000 units.
• Lucid plans to increase capital expenditure to $1.5bn in 2024, up from $910.6m last year, in preparation for manufacturing the Gravity SUV.
• The Gravity SUV, priced around $80,000, will compete with Tesla’s Model X and is set to go into production later this year.

Singapore to build SE Asia’s largest EV fast-charging hub

• Volt Singapore announced plans to construct Southeast Asia’s largest public EV fast-charging hub in Singapore.
• The hub will feature up to 80 charging points, serving buses, taxis, private vehicles, and other EVs.
• Volt was awarded a 15-year contract to develop and operate the hub by ComfortDelGro, Singapore’s leading taxi operator.
• The project’s initial phase will be operational by the first half of 2026, with charging points of 360kW and 120kW capacity.
• ComfortDelGro aims to transition 90% of its car fleet and 50% of its buses to electric or hybrid models by 2030.
• The number of EV chargers in Singapore is projected to reach 60,000 by 2030, up from over 7,100 existing charging points.

Company News

Cora Gold (CORA LN) 1.9p, Mkt Cap £8m – Reconnaissance drilling results at Madina Foulbe

• The Company released results from the reconnaissance drilling programme at the Tambor gold anomaly, on e of four key target areas within the Madina Foulbe exploration license in east Senegal.
• 40 shallow (~50m) holes were completed for a total of 2,018m testing 10 of the most prospective targets wit a 3×1.6km gold soil anomaly at Tambor.
• Drilling at 6 out of 10 targets intersected mineralisation over broad widths with that may be followed up with further drilling.
• Selected results included:
• 10m @ 4.41g/t Au from 41m in hole MFC0013 at Target 1
• 16m @ 0.97g/t Au from 38m in hole MFC0014 at Target 1
• 29m @ 0.71g/t Au from 1m in hole MFC0021 at Target 9
• 19m @ 0.61g/t Au from 34m in hole MFC0049 at Target 8
• Historically, the anomaly has seen only limited amount of drilling with just one of these targets drill tested in 2020.

Goldstone Resources* (GRL LN) 1.4p, Mkt Cap £14m – Production guided to grow to 1kozpm with expansion of HL operations (corrected)

• Our headline on Goldstone Resources said “production guided to grow to 1kozpa”; this should have read 1kozpm, the rest of the comment is unchanged and repeated below.
• 2024 production to mid June amounted to 1.4koz.
• Gold recoveries are reported to have significantly improved to 68% over the past six months (2022 average of 34%).
• Current operations are running at an average of 5.4ktpm of mined and stacked ore.
• Operations are on track to reach planned 50ktpm targeting 1kozpm within six months.
• Pad 4 construction is nearing completion, Pad 5 is in the process of being constructed while Pads 6 and 7 are in the engineering phase.
• The Company hired a 50t excavator and three 45t ADT trucks.
• Additionally, the team commissioned an on site laboratory that will help to manage better grade control.
• Further drilling planned at the Homase trend to grow the existing mineral inventory.

*SP Angel acts as broker to Goldstone Resources

Guardian Metal Resources (Formerly Golden Metal Resources) (GMET LN) 32.5p, Mkt Cap £33m – Investigating garnet potential at Pilot Mountain

Power Metals Resources* (POW LN) 19p, Mkt cap £20m

(Power Metals* holds a 51% stake in Golden Metal Resources)

1. Guardian Metal Resources (formerly Golden Metal Resources which changed its name in June) confirms plans to investigate the industrial garnet potential as part of its current pre-feasibility study (PFS) into its Pilot Mountain tungsten project in Nevada.
2. The company will subject a 300kg bulk sample derived from six boreholes (118m) to metallurgical test work with the sample expected to be shipped “to a highly respected laboratory for detailed metallurgical testing within the next few days”.
3. “Industrial garnet is demonstrated to comprise an average of 40% of many mineralised intervals across the known deposit areas (Desert Scheelite & Garnet) … [and] … the Company is of the belief that the industrial garnet component, subject to completion of the metallurgical study, could be material to overall Project economics”.
4. CEO, Oliver Friesen, said that investigation of “the garnet potential … has been high on our list to get the next steps in motion … [and the metallurgical work will] … form the basis of important next steps which include determining the recoverability of the various garnet species, how they fit into the current flow sheet and following that their effect on overall project economics”.
5. Today’s announcement also confirms that it expects to release further drilling results from Pilot Mountain shortly and that “results from the Company’s largest ever geophysical campaign are expected imminently”.

Conclusion: Investigation of the viability and possible economic impact of industrial garnet production from the Pilot Mountain tungsten project is being included in the current PFS work.  We await the results with interest and also results from the latest drilling and highlights of the geophysical exploration programme.

*SP Angel acts as Nomad and Broker for Power Metals

Ivanhoe Mines (IVN CN) C$18.55, Mkt cap C$24bn – Q2 Production results as Phase 3 concentrator ramps up

• Ivanhoe Mines produced 100.8kt of copper in concentrate in 2Q24 and 187kt in 1H24.
• The Company’s Phase 3 concentrator is expected to hit steady-state production in 3Q24, bringing annualised capacity to 600kt.
• 2024 production guided at 440-490kt from Kamoa-Kakula.
• Phase 1 and 2 concentrators milled 2.3mt of ore over the quarter at an average feed grade of 5.3% Cu.
• Average flotation recovery rate of 87% over the quarter, above the design rate of 86%.
• 4.82mt of ore grading 3.26% Cu is currently stored in ROM stockpiles, which is being used for the hot commissioning and ramp up of the Phase 3 concentrator.
• Ivanhoe is working alongside the DRC government to boost grid infrastructure, funding a transmission capacity increase and grid improvement.
• The Company reports that power is being subsidised by the Zambian interconnector, with 55MW currently being imported from Zambia and Mozambique.
• Back up generation capacity on site is expected to increase to >200MW by the year end.

KEFI Gold and Copper* (KEFI LN) 0.6p, Mkt Cap £38m – Amendments to management bonus plan

• The Company added modifications to the proposed management bonus plan linking payments to performance of the share price.
• First bonus payment (STI 1) will now become effective on granting of credit approvals by the lenders and if the closing mid price is above 1.5p for five consecutive trading days.
• Second bonus payment (STI 2) will be paid not earlier than 12 months post STI 1 and on disbursement of lenders’ funds as well as if the share price is above 2.5p for five consecutive trading days.
• Third bonus payment (STI 3) will be paid not earlier than 12 months post ST2 and on start of production at Tulu Kapi as well as if the share price is above 3.0p for five consecutive trading days.
• New scheme is set to better align interests of investors and the Company’s management.

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

Lundin Gold (LUG CN) C$22, Mkt cap C$5.3bn – Q2 Production results as throughput improves on debottlenecking

• Lundin Gold reports 2Q24 gold production at 133koz from Fruta del Norte.
• 425kt of ore was processed at an average grade of 11g/t Au with 89% recoveries.
• Throughput improvement in 1H24 to 839kt from 811kt in 1H23.
• 84koz produced in concentrate and 49koz in Doré
• The Company reports an average realised gold price of $2,379/oz for the quarter and $1,942/oz for 1H24.
• Lundin gold retains guidance between 450-500koz in 2024, stating that improvement in throughput has come as a result of ‘continued debottlenecking and is not an impact of the Process Plant Expansion.’

Orion Minerals  (ORN AU) A$0.02, Mkt cap A$77m – Copper assays from Okiep, South Africa

• Orion which holds the Okiep and Prieska in the Northern Cape, SA, provides assay results from Okiep.
• Drilling has been targeting the Flat Mine South, where previous results showed intersections up to 49m at 5% Cu.
• Today the Company reports results from two of the first four holes planned at Flat Mine.
• The drilling is intended to confirm historical drilling from Newmont and Goldfields in the 1980s and 1990s.
• An historic MRE showed 9.4mt at 1.3% Cu, with 3.4mt at 1.4% Cu.
• The four holes form part of a 5,800m, 11 hole campaign at Okiep.
• Highlights for FMS include:
  • OFMSD076
    • 9m at 0.7% Cu from 430m
    • 2m at 1.2% Cu from 446m
    • 6m at 0.9% Cu from 454m
  • OFMSD077
    • 43m at 3.4% Cu from 527m.
• The company mentions the potential for XRF ore sorting to reject internal waste before milling.

Premier African Minerals (PREM LN) 0.1p, Mkt Cap £30m – Progress report on the Zulu lithium project.

• Yesterday afternoon, Premier African Minerals issued a progress report on its Zulu lithium project in Zimbabwe confirming that the conditioning tank is now on site and that it expects the commissioning is expected “to be completed over the course of this week”.
• The expected completion date is consistent with earlier expectations and now that remedial measures on the plant are now close to completion, the company may be able to produce concentrate for sale “on an ex-mine gate basis” as previously announced.
• The announcement yesterday also confirmed that the company’s AGM will be convened on 29^th July by which time the company may be able to report more fully on the performance of the Zulu project.

Conclusion: Premier African Minerals now appears close to be rectifying the shortcomings at its troubled Zulu lithium project.

Strategic Minerals* (SML LN) 0.2p, Mkt Cap £3m – Record Q2 magnetite sales from Cobre prompt guidance for >US$4m 2024 sales

• Strategic Minerals reports Q2 2024 revenues of $1.3m vs $0.4m in the same period last year from operations at its Cobre magnetite tailings operations in New Mexico.
• The company highlights the results for the 3 months to 30^th June 2024 as the “Highest June quarter sales on record” bringing YTD sales in 2024 to ~US$2.1m.
• The results prompt Strategic Minerals to upgrade its 2024 sales expectations to over US$4m.
• When the Q1 Cobre sales were reported in April this year Strategic Minerals said that it expected “full year sales volumes will exceed 50,000 tons … with revenues expected to exceed US $3.5m”.
• We estimate that sales so far this year are currently over 31,000t implying that full year sales could now outpace the 50,000t indicated in April.
• Strategic Minerals ascribes the increased June quarter sales to the “return of Cobre’s major client and the addition of a substantial new client” and points out that “this is an impressive 250%+ increase on the June 2023 quarter when Cobre’s major client was not purchasing magnetite. However, this is also an impressive 95% increase on June 2022 sales, when the major client was active”.
• Explaining that quarterly sales “have exceeded our expectations” Managing Director, John Peters, confirmed that the company is continuing “to progress negotiations with potential investors on both its Redmoor and Leigh Creek projects as well as seeing cautious signs of more widespread renewed investor interest”.
• Mr. Peters also confirmed that it is continuing “to closely monitor short term cash flow and remains committed to avoiding the need for a dilutive capital raise, currently considered unnecessary”.

Conclusion: Record Q2 sales from Cobre build on strong Q1 results and have triggered the company to guide that 2024 sales are expected to exceed US$4m (2023 -US$1.6m) which is, we believe, the highest annual total since sales of US$5.7m in 2017.

*SP Angel acts as Nomad and Broker to Strategic Minerals

No.1 in Base Metals: SP Angel mining team awarded No 1. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q1 2024

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

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

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

Analysts

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

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

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

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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