SP Angel Morning View -Today’s Market View, Wednesday 11th September 2024

Lithium equities rally on reports CATL has shut mining operations

MiFID II exempt information – see disclaimer below

Adriatic Metals (ADT1 LN) – Interim results reiterate nameplate by 4Q24

Aura Energy* (AURA LN) – Increased mineral resource extends life and enhances project economics at Tiris uranium project in Mauritania

Galan Lithium (GLN AU) – Up to A$25m equity raise

Gem Diamonds (GEMD LN) – Letšeng yields another >100 carat diamond

Greatland Gold (GGP LN) – US$354m placing to fund consolidation of Havieron project

Power Metal Resources* (POW LN) – Further agreements for Middle Eastern exploration

Rainbow Rare Earths (RBW LN) – Phalaborwa resource increase adds 2 years to project life

Vast Resources (VAST LN) – Operations update

Lithium equities rally on reports CATL has shut mining operations

• Downbeat lithium equities soared in China and Australia overnight on reports of more supply coming offline.
• MinRes jumped 16%, Pilbara and Liontown jumped 13%, Ganfeng and Tianqi climbed 10% whilst development plays Develop and Patriot also rallied.
• Much of this was likely short covering, with bears covering positions following a profitable trade amid the downturn.
• The move followed reports by UBS that CATL has placed operations in Jiangxi in care and maintenance.
• Reports suggest this accounts for c.8% of China’s monthly LCE supply.
• Operations are reported to have been lossmaking for the past two months amid a slump in lithium prices, seeing carbonate prices in China fall below $10,000/t and Australian spodumene down to $740/t.
• China carbonate futures rallied 6% overnight.
• Citi had reported that lepidolite production has been cut by 14% over the past few weeks.
• Lithium bull hopes rest on a destocking cycle from downstream lithium battery makers, which are holding ample inventories.
• We remain bullish long term lithium prices, and see spodumene prices as likely nearing a floor, with Mt Cattlin coming offline amid losses.
• Lower prices over the next few years are likely to disincentivise capacity expansion, whilst EV penetration continues to grow.
• This presents the risk of another supply shock as seen in 2022 towards the second half of the decade.

Gold ($2,525/oz) pushes record highs amid bond rally and oil sell-off on global growth concerns

• Gold continues to hover around $2,525/oz, testing its record levels of $2,530/oz in the spot market.
• Bonds have rallied over the past few days, with the 10 year yield sliding further to 3.61%.
• Gold usually reacts well to lower yields, with ETF investors increasing allocations to bullion.
• CPI data is due today, with bonds and gold likely to benefit from a downside surprise.
• However, if CPI comes in hot, expect both asset classes to pare some recent gains.
• The oil price is sending some growth concern signals to the market, with OPEC lowering demand forecasts amid slowing global growth.
• FOMC is due next week which will see Powell’s Fed decide between a 50 and 25 bp cut.
• The market currently sees a 67% chance of a 25bp cut, which, unless CPI comes in sharply lower, will likely eventuate.
• Focus will then turn to November and December cuts, with slowing hiring the Fed’s primary focus now.
• An acceleration in layoffs will likely be supportive for gold prices, as will increased geopolitical tensions amid the BRICs summit.
• Central banks have been a primary driver behind gold’s rally this year, although China has recently slowed purchases.
• Reports suggest that Chinese retail investors are looking to gold as the most attractive asset class currently, with their equity market struggling alongside depressed property prices.

Is a portion of China’s $230bn dollar EV / battery investment crumbling away

• Many global car companies are very good at making cars.
• Panasonic and a few others are very good at making batteries.
• Tesla and BYD appear to be very good at making Electric Cars and batteries. In Tesla’s case in cooperation with Panasonic which appears to work well.
• But, what if there are a few Gigafactories that are not so good at making batteries?
• What if some of these factories have lax quality control?
• What if some sub-standard batteries are sold via a back door into the supply chain like monkeys out of a lab in Wuhan? We also know the REE mix in permanent magnets from China is sometimes not what it should be!
• What if there are a number of sub-standard batteries in cars and consumer goods waiting to fail, short-circuit, overheat and in some rare cases catch fire?
• Overheating of Li-ion batteries on aircraft is an increasing concern. The FAA report 37 verified incidents this year a 28% increase over the past five years mainly down to increased sale of E-cigarettes and spare Li power banks.
• Tesla EVs carry some 7,104 battery cells in a Model S meaning that Tesla put >12m Li-ion battery cells into its vehicles. We note; most Tesla fires resulted from physical accidents and their battery failure rate is extraordinarily low.
• We believe big auto manufacturers are very good at quality control but if you ran a car company would you trust your brand to a new Gigafactory?
• There appear to be more fires in Electric Bikes, E-Cigarettes, and power banks
  • “Of the half million e-scooters and electric bikes on the market just 0.011% caught fire, while EVfiresafe’s 2010-2020 data had 0.0012% of EV cars a risk”
  • This compares with 0.1% of Internal Combustion Engine cars catching fire.

Gigafactory quality:

• We understand Li-ion cell production leads to a failure / scrap rate of around 20-30% depending on the quality of the factory output.
• But what if lax control allowed a number of lesser quality batteries to be installed into EVs. It can be particularly difficult to maintain standards when profits fall.
• While very few EVs ignite due to internal short circuit the impact on confidence in a brand and in EVs in general is severe.

Capital commitment:

• China is reported to have invested >$230bn in its EV industry according to the Centre for Strategic and International Studies with 40% subsidies now reduced to around 11%.
• While BYD, Geely, CATL and a few other beneficiaries look like they will survive there will be a number of new EV manufacturers that don’t make it requiring substantial write-downs on their loans.
• In many cases local authorities, local businesses and local people have invested heavily into these new EV enterprises. Evergrande was one highlighting the interconnected nature of these investments.
• China is reported to have >600,000 NEV-related enterprises many of which will suffer from a loss of confidence or collapse.
• The government is doing its best to help sell EVs into overseas markets but without easier access to the US, Canada, India and the EU they will fall far short of their sales targets.

Technology:

• China and Chinese EV manufacturers are investing billions in research into solid state Li-ion batteries which will less prone to short circuit.
• LFP ‘Lithium Iron Phosphate’ batteries now make up 47% of the EV battery market despite their heavy weight due to lower cost and better safety.
• NCM ‘Nickel Cobalt Manganese’ still wins in the power to weight stakes but are more expensive though costs have fallen substantially.
• Solid State NCM should be a game changer when combined with improvements in Anode and Cathode quality.

For consumers: Choosing the right EV is a task, but choosing best EV with the best made batteries is more of a challenge.

• The South Korean government in leading the way in greater battery / Gigafactory transparency though there may be some political as well as safety motivation.
• Third-party accreditation is needed to ensure quality control and customer confidence as the market evolves.

Economics

US – August inflation numbers are due later today with estimates for a slow down in the headline measure and little change in the core reading.

• A potential larger than expected slowdown in inflation is likely to give the Fed more comfort to proceed with more than 25bp rate cut in the coming meeting.
• Estimates are for CPI and Core CPI to come in at 2.5% from 2.9% and 3.2%, unchanged from July, respectively.
• Kamala Harris appears to come out with a victory against Donald Trump after Tuesday night debates according both to CNN and Fox News polls.
• Harris delivered a series of blows to her contender on issues from abortion to his fitness for office putting Trump on the back foot, FT reports.

China – Economy is looking worse than we thought

• Business is down, unemployment is rising, confidence is low.
• Local authorities appear to have lost confidence or run out of firepower.
• Hard times reported by contacts in Shanghai
• Shanghai Shipping Index currently trading at $1,900 up on an average $1,230
• WCI composite has fallen 20% from its July high to current 4,780 for a 40ft container. The average is 4,230. The July high was down to Houthi attacks diverting container shipping away from Suez.
• Increasing re-shoring starts to toll with futures indices heading back to the low of 1,400 last seen in November 2023 (Covid high was 10,400).
• Rumours on President Xi’s health persist though we found a picture of Xi meeting the South Sudan president last week

Recap on this week’s data where exports in August hit a two-year high while imports disappointed

• Overseas shipments reached $309bn, the highest level since September 2022, strongly beating estimates.
• Increasing trade tensions and slowing growth in the West may weigh on the outlook.
• Meanwhile, domestic market demand appears to be struggling amid ongoing property market crisis and rising deflation risks.
• The market reacted to the news negatively with regional equity index CSI 300 down and Chinese 10 year yields hitting a new record low.
• Exports (%yoy, Aug/Jul/Est): 8.7/7.0/6.6
• Imports (%yoy, Aug/Jul/Est): 0.5/7.2/2.5

Deflation risk as weak inflation highlights loss of consumer cofidence

• CPI (%yoy, Aug/Jul/Est): 0.6/0.5/0.7
• PPI (%yoy, Aug/Jul/Est): -1.8/-0.8/-1.5

UK – Sterling is little change this morning following the release of GDP data showing no growth basis for the second consecutive month in July.

• Odds of a rate cut by the central bank during the September meeting were little changed currently standing at ~24%.
• Heathrow airport reported nearly 8.0m passengers flying in August, a fourth consecutive month of record numbers.
• GDP (%mom, Jul/Jun/Est): 0.0/0.0/0.2
• GPD (3M/3M, Jul/June/Est): 0.5/0.6/0.6

Indonesia boosts refined tin exports whilst China struggles with output

• Reuters reports Indonesian refined tin exports in August climbed 30% yoy.
• MySteel reports that China’s tin ingot inventory fell by 1,400t wow to 11kt vs LME tin ingot inventory up 55t to 4,700t.
• Yunnan Tin went placed its Geiju smelter on maintenance, expected completion at the end of this month.
• The ITA has expressed concerns over feedstock limitations in China, with Myanmar output expected to continue to weaken.

Currencies

US$1.1045/eur vs 1.1042/eur previous. Yen 141.41/$ vs 143.52/$. SAr 17.859/$ v 17.863/$. $1.309/gbp vs $1.310/gbp. 0.666/aud vs 0.666/aud. CNY 7.113/$ vs 7.119/$.

Dollar Index 101.36 vs 101.62 previous

Precious metals:         

Gold US$2,525/oz vs US$2,505/oz previous

Gold ETFs 83.0moz vs 83.0moz previous

Platinum US$949/oz vs US$946/oz previous

Palladium US$987/oz vs US$964/oz previous

Silver US$28.8/oz vs US$28.5/oz previous

Rhodium US$4,825/oz vs US$4,800/oz previous

Base metals:   

Copper US$9,140/t vs US$9,111/t previous

Aluminium US$2,365/t vs US$2,350/t previous

Nickel US$15,940/t vs US$15,860/t previous

Zinc US$2,751/t vs US$2,711/t previous

Lead US$1,984/t vs US$1,966/t previous

Tin US$31,270/t vs US$30,900/t previous

Energy:           

Oil US$70.3/bbl vs US$71.6/bbl previous

• Brent crude oil prices fell briefly below $70/bbl despite the API reporting a 2.8mb w/w draw (+0.7mb exp) to US crude stocks, with the outlook for the global demand and supply balance still a major focus of concern.
• OPEC made only minor revisions to global oil demand growth expectations of 2mb/d in 2024 and 1.7mb/d in 2025 in September’s Monthly Oil Report, with supply growth being driven by the US, Brazil, Canada, and Norway. The EIA’s STEO forecasts demand growth of 1mb/d in 2024 with the EIA due to report tomorrow.
• European energy prices edged lower as French nuclear reactor operating levels fell 1% w/w to 64% of 61.4MW capacity and Gazprom reporting stable supply of 42.3mcm/d (~1.5bcf/d) via the Sudzha metering station.
• APA Corporation announced the sale of 21kboe/d (57% oil) of non-core producing properties in the Permian Basin to an undisclosed buyer for $950m, which will be used primarily to reduce debt.
• Kosmos Energy announced a $500m offer of 7-year bonds with an 8.75%coupon, which will be used to fund tender offers for a portion of its 7.125% bonds due 2026, 7.75% bonds due 2027 and 7.5% bonds due 2028.
• Ørsted was awarded a contract for a 55MW onshore solar farm in Ireland’s fourth onshore Renewable Electricity Support Scheme (RESS 4) auction. The average price for solar in the auction was €104.76/MWh.

Natural Gas €35.3/MWh vs €37.6/MWh previous

Uranium Futures $79.5/lb vs $79.6/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$92.7/t vs US$90.9/t

Chinese steel rebar 25mm US$470.6/t vs US$470.2/t

Thermal coal (1st year forward cif ARA) US$117.0/t vs US$119.3/t

Thermal coal swap Australia FOB US$136.0/t vs US$138.3/t

Coking coal Dalian Exchange futures price US$171/t vs US$170.9/t

Other:  

Cobalt LME 3m US$24,300/t vs US$24,300/t

NdPr Rare Earth Oxide (China) US$59,400/t vs US$62,226/t

Lithium carbonate 99% (China) US$9,771/t vs US$9,762/t

China Spodumene Li2O 6%min CIF US$740/t vs US$740/t

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

China Tungsten APT 88.5% FOB US$333/mtu vs US$333/mtu

China Graphite Flake -194 FOB US$440/t vs US$440/t

Europe Vanadium Pentoxide 98% 4.6/lb vs US$4.6/lb

Europe Ferro-Vanadium 80% 24.55/kg vs US$24.55/kg

China Ilmenite Concentrate TiO2 US$320/t vs US$320/t

China Rutile Concentrate 95% TiO2 US$1,371/t vs US$1,370/t

Spot CO2 Emissions EUA Price US$72.4/t vs US$72.4/t

Brazil Potash CFR Granular Spot US$290.0/t vs US$290.0/t

Germanium China 99.99% US$2,575.0/kg vs US$2,575.0/kg

China Gallium 99.99% US$445.0/kg vs US$445.0/kg

Battery News

BYD raises annual sales target to 4m EVs and plug-in hybrids

• BYD has revised its 2024 sales forecast to 4m units, up from 3.6 million, due to increased demand for plug-in hybrid vehicles. (Bloomberg)
• Monthly sales of NEVs in China surpassed 1m, capturing a 53.8% market share, overtaking combustion-engine cars.
• BYD has sold 2.3m  EVs and hybrids this year, needing to deliver 425,000 units monthly for the rest of 2024 to meet its new target.
• BYD also reaffirmed its export goals – with a new car-carrying ship the company expects overseas sales to double to over 450,000 units by year-end.
• Government incentives, such as a 20,000 yuan rebate, are boosting consumer demand for electric and hybrid vehicles in China.

BYD’s General Manager has since denied that these reports are accurate and is not aware of any official revised sales target.

Minor change could increase EV and grid-scale battery lifespan by up to 50%

• A simple adjustment in factory charging methods can increase lithium-ion battery lifespan by 50%, according to research by the SLAC-Stanford Battery Center.
• Charging new batteries with high currents during their first cycle reduced initial charging time from 10 hours to just 20 minutes.
• Researchers found that high initial charging currents lead to greater lithium loss upfront, but this loss improves battery performance and extends lifespan by creating a better protective layer on electrodes.
• The findings reduce manufacturing time and cost, potentially lowering the cost of electric vehicles and improving the efficiency of grid-storage batteries.
• The study suggests that EV batteries could last for up to 500,000 miles, lowering total cost of ownership and reducing the environmental impact of battery production.
• The technology also boosts grid-storage capabilities, bringing renewable energy sources like wind and solar closer to outpacing fossil fuels in cost and efficiency.

Thai EV makers seeking to renegotiate government incentives as EV sales stagnate

• Thailand’s Electric Vehicle Association of Thailand (EVAT) are looking to extend production deadlines set in government incentive schemes as sales of EVs slow.
• The government schemes helped bring in investment of $1.44bn in new production facilities from international automakers like BYD and Great Wall Motor.
• Thailand has seen sales slow and the EVAT are looking for more time to meet targets set out in the incentive scheme.
• The EV 3.0 plan, requires companies receiving tax breaks and other support to produce in Thailand this year the same number of vehicles they imported between 2022 and 2023.

New solar-powered streetlights could change EV charging in urban areas

• Beam Global, has just announced the BeamSpot, a sustainable EV charging infrastructure.
• The BeamSpot replaces a standard street lamp with a module that harnesses solar, wind and utility-generated electricity alongside a 15kWh battery pack.
• Beam claims each unit can provide 220mi of range daily with a 5.7kW outlet, for trickle charging.
• Beam Global says it can tap into the existing infrastructure, with its BeamSpot units requiring no “new or upgraded utility grid circuits, trenching, construction, easements, leases or complex permitting”.

Company News

Adriatic Metals (ADT1 LN) 147p, Mkt cap £438m – Interim results reiterate nameplate by 4Q24

• Adriatic reports six month results to 30^th June 2024.
• The Company reiterates expectations of nameplate production capacity by 4Q24.
• The company reports underground development reached 1,387m in 1H24.
• 8,420m of exploration drilling has been completed over the period, targeting Rupice, two rigs now active at Raska.
• The Company reports $59m in cash at the end of the period, and $120m of senior secured debt drawn from Orion.
• Net debt position of $111m.
• Remaining CAPEX due in 2H24 of $13m.
• The first debt repayment due to Orion is currently scheduled for 31^st December 2024.
• The Company has secured an additional $25m facility from Orion that is currently undrawn.
• Ore production of 25.5kt reported in August.
• Regarding the TSF, alternative facility options are ‘being progressed,’ following the Constitutional Court ruling in July.

Aura Energy* (AURA LN) 6p, Mkt Cap £53m – Increased mineral resource extends life and enhances project economics at Tiris uranium project in Mauritania

(Aura Energy hold 100% of Tiris Uranium and 100% of the Häggån Project in Sweden, Häggån hosts 2.5bnt of vanadium, SOP ‘sulphate of potash’ and uranium resource)

• Aura Energy reports that it has updated the economics of its Tiris uranium project in Mauritania to reflect the 55% increase to the mineral resource announced in June.
• The larger, 91.3mlb U₃O₈ resource, increases the projected mine life to 25 years from the 17 years envisaged in the February 2024 FEED study with unchanged US$230m of development capital delivering a 29% increase in after-tax NPV_8% to US$499m (previously US$388m) and generating an IRR of 39% (previously 36%).
• The assessment mirrors the US$80/lb uranium price used in the earlier study and Aura Energy explains that at “uranium prices of US$100/lb U₃O₈ the economics increase to post-tax NPV₈ of US$779M (A$1,145M) with IRR of 55%”.
• The extended mine life lifts overall life-of-mine production to 43.5m lbs U₃O₈ (previously 30.1mlbs) at a slightly increased all-in-sustaining cost of US$35.7/lb (previously US$34.5/lb).
• Welcoming the revised economic outcomes, Managing Director, Andrew Grove, expressed the view that “there is still very significant potential to continue to add to the Mineral Resource and Reserve inventory around Tiris East and across the whole northern Mauritanian region, within the 13,000km² of tenements that Aura has under application”.
• He said that the “updated Production Target study has not only increased the mine life and significantly improved the project economics but has simplified and de-risked the early mining sequence and brought forward some uranium production by 21% in the first year, and by 9% over the first five years compared to the FEED study”.
• Mr. Grove also confirmed that Aura Energy is “rapidly working towards achieving the Final Investment Decision by the end of the current quarter”.
• The company has previously described a simple mining operation at Tiris with a “shallow, free digging operation without the need for crushing and grinding”.  The company’s life-of-mine production profile includes around 33% of material currently classified as ‘Inferred’ resources but these are “mostly beyond ten years in the mining schedule” providing, in our view, ample time for a more detailed assessment prior to mining.
• “Beneficiation delivers a high-grade leach feed averaging 2,217ppm U₃O₈ increasing from 1,997ppm U₃O₈ over first 5 years) and overall remains approximately the same at 1,752ppm U₃O₈ from 1,743ppm U₃O₈ (LOM) at a very low average cost of US$9.16/lb U₃O₈”.
• A modular plant design “is well suited to capital efficient and simple expansion to accommodate accelerated processing”.
• Commenting on the resource expansion potential, at Tiris East and “more widely in the Tiris Zemmour province” Aura Energy says that it “will continue to work to build northern Mauritania as a significant global uranium province”.

Conclusion: The increased mineral resource at Tiris, announced in June, provides a platform for a longer project life delivering a 29% increase in the company’s projected after-tax NPV while Aura Energy remains optimistic on the potential for further resource expansion as it extends its exploration into new areas.

*SP Angel acts as Nomad and Broker to Aura Energy

Galan Lithium (GLN AU) A$0.12, Mkt Cap A$56m – Up to A$25m equity raise

• The Company is raising up to A$25m in new equity to fund further development of its lithium brine HMW Project in Argentina.
• The announcement that came out yesterday reports A$12m secured in firm commitments and an up to A$13.3m 1 for 4 rights issue.
• The placing price is A$0.105 representing a ~9% discount to the previous closing price.
• Chengdu Chemphys, a lithium processing and technology company, will subscribe for A$4.5m, included in firm commitments part of the raise.
• Chengdu Chemphys signed an offtake prepayment MOU with Galan in August involving a US$40m offtake prepayment in exchange for a minimum of 23kt LCE delivered over 2025-2030.
• The prepayment will be secured over lithium inventory and HMW project.

Gem Diamonds (GEMD LN) 11.45p, Mkt Cap £16.1m – Letšeng yields another >100 carat diamond

• Gem Diamonds reports the recovery of a 126.2 carat Type II white diamond, from its 70% owned Letšeng mine in Lesotho.
• This is the 12th diamond larger than 100 carats recovered from the mine this year, the most recent being a 122.2 carat stone reported earlier this month.
• The latest large diamond adds to the mine’s established history of producing large diamonds which have included the 910 carat ‘Lesotho Legend’ recovered in 2019,and understood to be the fifth largest gem quality diamond ever discovered at that time, which realised US$40m when sold in Antwerp.

Greatland Gold (GGP LN) 5.4p, Mkt Cap £370m – US$354m placing to fund consolidation of Havieron project

• Greatland Gold reports that it has conditionally placed a further ~5,179m shares at a price of 4.8p/share to raise ~£248.6m (~US$325m) to fund the purchase of the 70% stake in the Havieron project it does not currently own plus the nearby Telfer gold/copper mine from Newmont Mining.
• Newmont has agreed to sell the stake it acquired in Havieron plus the Telfer mine which it acquired as a result of its takeover of Newcrest Mining for a total of “up to US$475 million” and the placing provides “the US$155.1 million cash component of the Acquisition consideration, repayment of the US$52.4 million outstanding Havieron joint venture loan to Newmont, repayment of the outstanding balance of approximately A$7.1 million under an existing working capital facility… transaction costs and expenses in connection with the Acquisition and the Placing, and working capital requirements”.
• The company is also issuing a further ~2,229m shares as part of the consideration representing around 20.4% of the enlarged company “with an initial 12-month voluntary lock-in” (inclusive of the placing).
• Havieron, which was discovered by Greatland Gold in 2018 beneath around 400m of cover, hosts a mineral resource of 131mt at an average grade of 1.7g/t gold and 0.21% copper with continuing drilling holding the possibility for expansion of the resource.
• Ore reserves, included within the resource, are 3mt at an average grade of 3.0g/t gold and 0.44% copper.
• Prior to Newmont’s acquisition of Newcrest, Newcrest was aiding in the joint development of a 2.8mtpa underground mine at Havieron “with average annual production of 258koz gold equivalent at a lowest quartile all-in sustaining cost (AISC) globally of US$818/oz in steady state (first 15 years) with a 20-year total mine life”.
• Greatland Gold’s development strategy is to integrate the long-established Telfer mine and Havieron, located 45km west, as a unified “mining and processing operation, to create a generational gold copper mining complex.”

Conclusion: Greatland Gold has raised the funds to consolidate its ownership of the Havieron deposit and acquire the Telfer mine and its facilities as a platform for integrated development.

Power Metal Resources* (POW LN) 17p, Mkt cap £19m – Further agreements for Middle Eastern exploration

• Power Metal Resources has signed two additional non-binding HoT agreements with Alara Resources and Awtad Copper.
• The agreement sees Power Metals able to earn a 12.5% stake in the Block 8 concession in Oman by spending $740k on exploration activities.
• Once POW has spent the initial $740k, a future earn-in agreement will be negotiated.
• Block 8 is held under a JV between Alara and Awtad Copper.
• Awtad Copper is backed by the Al Maawali Family, and Alara owns a 10% in the concession.
• POW expects to sign a binding agreement within 15 days of executing the HoT.
• Alara holds an option to increase their interest to 70% in the JV.
• Block 8, covering 496km² is considered prospective for copper mineralisation, with geophysical anomalies identified.
• Alara has been commissioning a copper concentrator in Oman, selling 313t copper in concentrate to Trafigura in the June quarter.
• The Block 8 prospect lies along the Somail Opihalite, where over 150 VMS prospects have been discovered.
• Block 8 has significant regolith cover, which hides the exposed geology, leaving it prospective for exploration for base metal deposits.

Conclusion: Power Metals continue to secure exploration interests in the Middle East, having agreed a LoI yesterday for exploration in Saudi Arabia. Today, they have entered a HoT agreement to explore for base metals in Oman, via the Block 8 concession. The Company has proposed an exploration programme, having used historic surface work, for a combination of grass roots exploration and drilling. A legal binding agreement is expected to be signed in the next 15 days, and we look forward to more progress in the Arabian Shield as POW continues to progress their strategy.

*SP Angel acts as Nomad and Broker for Power Metal Resources

Rainbow Rare Earths (RBW LN) 9.75p, Mkt cap £54m – Phalaborwa resource increase adds 2 years to project life

• Rainbow Rare Earths has reported a 15% increase in the overall ‘Measured, Indicated & Inferred’ resource of its 85% owned Phalaborwa rare earth project in South Africa.
• On a 100% basis, reported at a 0.2% TREO cut-off, the new resource of 35mt at an average grade of 0.44% TREO (total rare-earth oxide) extends the project life by an additional 2 years to 16 years.
• Approximately 46% of the total resource tonnage (16mt at a grade of 0.45% TREO) is classified as ‘Measured’ with a further 43% (15.2mt at a grade of 0.43$ TREO) in the ‘Indicated’ category.
• CEO, George Bennett, said that the “updated JORC-compliant Resource for Phalaborwa reaffirms the huge value intrinsic to this project, which contains economic quantities of all four of the critical magnet REEs. It also points to the potential for value from other recoverable REEs, which are currently not included in our project economics”.
• Today’s announcement confirms that the “our most economically important REEs, being Nd, Pr, Dy and Tb, together represent over 30% of the basket by volume at Phalaborwa and 96% by value … [and also that the resource contains] … very low levels of radioactive elements, further attesting to the ‘green’ credentials of this project”.

Conclusion: The higher resource extends the project life at Phalaborwa by 2 years to sixteen years and could provide an opportunity to enhance the project’s economics.

Vast Resources (VAST LN) 0.11p, Mkt Cap £2m – Operations update

• The Company signed two agreements to process and market products from former rock dumps at the Hanes Gold Mine in the Alba region of Romania.
• Agreements were signed with Explore Eco Mining and Albamin Industry owned by local shareholders in Romania led by Radu Ciobutea.
• Dumps are located 113km away from the Batia Plai flotation plant with the material planned to be trucked using existing road infrastructure.
• The rock dump consists of more than 1.5mt grading 1.2-2.5g/t based on the testwork completed by owners and confirmed by laboratory tests carried out on the instructions of the Company.
• The Company plans to treat 250tpd (~90ktpa) of the material without impacting production of copper concentrate at Baita.
• First deliveries are due this week.
• The Company will receive a 20% on the profit from material processed every month as well as being entitled to a fee for processing of material at Baita.
• Under the second agreement the Company will market 500t of polymetallic concentrate located in a waste dump containing in excess of 25g/t Au.
• The concentrate is currently being bagged and to be sold in coming weeks with the Company to be paid 20% on the difference between revenue and all expenses associated with selling it (ie profit).
• At Baita Plai, the Company cut staff levels by more than 50% as part of its reorganisation bringing in new management team.
• At Aprelevka, a JV with the Company holding a 4.9% interest in income, production is reported to be picking up (29koz in 2Q24 from 1.8koz in 1Q24) with the team installing a new crushing circuit to increase throughput rates funded from operation’s cash flows.
• Works are expected to be completed 1Q25.

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

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.

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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