SP Angel Morning View -Today’s Market View, Wednesday 17th April 2024

Gold resilient as US interest rates soar on long-term inflation concerns

MiFID II exempt information – see disclaimer below

Alpha HPA (A4N AU) – Australian government financing for High Purity Alumina Project

Anglo American (AAL LN) – After 3^rd sales cycle 2024 sales approximately 16% below 2023 levels

Anglo Asian Mining* (AAZ LN) – Q1 gold sales of 3,925oz of gold bullion as company awaits approval to restart tailings emplacement

Antofagasta (ANTO LN) – Maintaining 2024 production guidance

Asiamet Resources (ARS LN) –High grade grab samples from BKM

Empire Metals* (EEE LN) – Update of Pitfield JV structure

Rio Tinto (RIO LN) – Production guidance maintained after a ‘stable’ first quarter

Serabi Gold (SRB LN) – Reports highest quarterly gold output since 2021

Tertiary Minerals* (TYM LN) – Drilling begins at Konkola West, Zambia

Gold resilient as US interest rates jump on long-term inflation concerns

• Gold prices have held around the $2,380/oz, having whipsawed in volatile trade.
• US Treasury yields have soared, with the 10-year climbing to 4.65%, up nearly 100bp since lows made in December after a dovish Fed presser.
• Gold has shrugged off combined strength from a sell-off in government debt and the dollar, two traditional headwinds to bullion.
• Powell spoke yesterday, highlighting that inflation persists but remains on track to reach the Fed’s goal.
• A May rate cut has been priced out by traders and the odds of a June cut are sliding.
• Analysts report central banks are buying c.25% of annual production, hovering around their highest levels since the 1971 Bretton Woods catalyst.
• Bulge bracket banks have boosted forecasts to gold prices to $2,700-2875/oz for 2025.
• ETF buying in the US is falling, although we note Costco has been selling out of $2,000/oz gold bars as retail buyers seek protection/speculate on rising prices.

Iron ore prices bounce in China on reported steel demand rebound

• Iron ore prices climbed to $115/t in Singapore overnight, before easing in volatile trade.
• Rio Tinto reported that Chinese steel exports are expected to ‘remain historically elevated.’
• Bloomberg reports rumours of a resumption in Chinese steel mill activity.
• Prices bounced off $100/t for the 62% index, despite limited signs of a recovery in Chinese property sector.
• High-cost producers of iron ore provide a floor around $100/t level.

 Lithium carbonate prices weaken as cathode demand remains soft

• Lithium carbonate prices slid below $15,000/t in China for some contracts.
• Battery-grade carbonate remains over $15,000/t.
• Downstream buyers are reportedly exercising caution, with a restocking cycle yet to kick off.
• Ken Brisden, CEO of Patriot, reports lepidolite producers likely require a $20-25/kg price, and does not expect African DSO operations to persist long term.

 Economics

China – Regulators clamp down on high-frequency trading which it sees as fuelling market turmoil.

• The CSRC aim to strengthen supervision over program trading in Chinese security markets (Caixin).
• The regulator is increasingly worried over the potential for quantitative traders, mathematical models and automated trading programs to disrupt equity markets.

 Eurozone – CPI 2.4% yoy in March vs 2.6% yoy in February

• CPI core (energy, food, alcohol & tobacco) 2.9% yoy vs  3.1% yoy in February

• Services inflation rose +1.76%
• Food, alcohol & tobacco rose +0.53%
• Non-energy industrial goods rose +0.30%
• Energy fell -0.16% mainly on lower gas prices due to high inventory levels after a relatively warm winter

UK – CPI falls to 3.2% yoy in March vs 3.1% yoy expected

• Core CPI fell to 4.2% from 4.5% yoy
• Goods CPI fell to 0.8% yoy in March from 1.1% yoy in February
• Services CPI fell to 6.0% from 6.1%

 Dubai – Storms bring year’s worth of rain flooding Dubai and closing airport

• Storms have brought a year’s worth of rain to Dubai, flooding the city and its airport its heaviest rainfall for 75 years.
• Flights were temporarily diverted though departures have restarted.
• Flooding appears to be a more regular event in Dubai in recent years.
• Oman also saw heavy rain with 18 people killed.
• Scientists have cited climate change as a contributory factor to the intensity of the flooding.

 Japan – Exports rise 7.3% in march vs  7% expected

• Solid growth in vehicles up 7.1%
• Semiconductor & electronic parts rose 11.3%
• Exports to China jumped to 12.6% yoy in March from 2.5% yoy in February
• Exports to the US slowed to 8.5%
• Exports to Europe also slowed to 3.0%
• Import fell -4.9% yoy in March to give a trade surplus of US$2.38bn

Currencies

US$1.0632/eur vs 1.0615/eur previous. Yen 154.58/$ vs 154.42/$. SAr 19.099/$ vs 19.079/$. $1.245/gbp vs $1.244/gbp. 0.642/aud vs 0.642/aud. CNY 7.239/$ vs 7.240/$

Dollar Index 106.24 vs 106.29 previous.

 Precious metals:         

Gold US$2,380/oz vs US$2,371/oz previous

Gold ETFs 81.4moz vs 81.5moz previous

Platinum US$950/oz vs US$965/oz previous

Palladium US$1,010/oz vs US$1,021/oz previous

Silver US$28.31/oz vs US$28/oz previous

Rhodium US$4,725/oz vs US$4,725/oz previous

Base metals:

Copper US$ 9,513/t vsUS$9,507/t previous

Aluminium US$ 2,568/t vs US$2,529/t previous

Nickel US$ 17,880/t vs US$17,765/t previous

Zinc US$ 2,782/t vs US$2,735/t previous

Lead US$ 2,153/t vs US$2,181/t previous

Tin US$ 31,930/t vs US$32,225/t previous

Energy:

Oil US$89.6/bbl vs US$90.5/bbl previous

Natural Gas €33.0/MWh vs €32.0/MWh previous

Uranium Futures $89.4/lb vs $89.9/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$109.9/t vs US$111.6/t

Chinese steel rebar 25mm US$513.8/t vs US$513.7/t

Thermal coal (1st year forward cif ARA) US$122.0/t vs US$121.0/t

Thermal coal swap Australia FOB US$136.3/t vs US$136.5/t

Other:  

Cobalt LME 3m US$27,830/t vs US$27,830/t

NdPr Rare Earth Oxide (China) US$53,189/t vs US$54,285/t

Lithium carbonate 99% (China) US$15,128/t vs US$15,125/t

China Spodumene Li2O 6%min CIF US$1,240/t vs US$1,240/t

Ferro-Manganese European Mn78% min US$972/t vs US$972/t

China Tungsten APT 88.5% FOB US$320/mtu vs US$320/mtu

China Graphite Flake -194 FOB US$490/t vs US$490/t

Europe Vanadium Pentoxide 98% 5.0/lb vs US$5.0/lb

Europe Ferro-Vanadium 80% 26.25/kg vs US$26.25/kg

China Ilmenite Concentrate TiO2 US$329/t vs US$329/t

China Rutile Concentrate 95% TiO2 US$1,416/t vs US$1,416/t

Spot CO2 Emissions EUA Price US$73.1/t vs US$69.9/t

Brazil Potash CFR Granular Spot US$305.0/t vs US$305.0/t

 Battery News

Tesla to lay off 10% of global workforce

• Tesla will lay off more than 10% of its global workforce due to declining sales and an intensifying price war for EVs (Reuters)
• The New York Times has also reported that the cuts will affect 14,000 employees.
• A leaked company email from CEO Elon Musk, announced that rapid growth had led to duplication of roles, and that as the company looks forward it would have to reduce headcount by 10%.

Tesla’s woes can be highlighted by the company’s gap in production and sales in Q1 2024

• Tesla produced 433,371 vehicles but only delivered 386,810 units, a difference of 46,561 vehicles.
• This represents a 9% yoy decline in Tesla’s deliveries compared to Q1 2023.
• The cumulative gap between Tesla’s production and sales is estimated to be around 160,000 units, raising concerns about the sustainability of Tesla’s current production strategy.

Amazon installs 17,000 EV chargers for Rivian electric van fleet

• Amazon operates a fleet of 13,500 Electric Delivery Vans (EDVs) across the US.
• The company has established a robust charging network to power its fleet, with 17,000 charging stations at 120 warehouses across the US. (Bloomberg)
• Rivian signed a supply deal with Amazon for 100,000 EDVs, which the company hopes will have a significant impact on its 2040 net zero goal.
• Amazon’s successful integration of Rivian’s EDVs serves as a blueprint for other companies looking to electrify their commercial fleets.
• Rivian initially manufactured the EDVs exclusively for Amazon but has now opened orders to other commercial fleet operators after ending the exclusivity agreement.

One third of US EV sales in 2023 were Tesla Model Ys

• In Q1 2024, one-third of all EV sales in the US were Tesla Model Ys, totalling 96,729 units sold.
• Despite an overall EV market slowdown, the Model Y still recorded a 1.4% yoy sales increase in Q1 2024.
• In contrast, sales of the Tesla Model 3 sedan saw a 43.9% decrease compared to Q1 2023, with 30,842 units sold.
• The Model Y captured a 35.4% market share of the entire US EV market in Q1 2024, followed by the Model 3 at 11.3%.
• Ford had a strong Q1 2024, with the Mustang Mach-E ranking third in EV sales (3.5% share) and the F-150 Lightning pickup fifth (2.8% share).
• Overall US EV sales in Q1 2024 were up 2.6% year-over-year, but the EV share dropped to 7.3% compared to Q4 2023, indicating a market slowdown.
• Tesla could not deliver around 47,000 EVs it produced in Q1 2024, reflecting broader market trends.

Nissan to produce solid-state batteries by 2029

• Nissan will begin to produce solid-state batteries for EVs at scale by early 2029 the company announce yesterday.
• The automaker will also introduce ‘giga-casting’ machines to improve efficiency and drive down costs for future models.
• Nissan will initially do prototype tests and develop the solid-state batteries at an unfinished pilot plant in Yokohama.
• The company expects to make its first solid-state batteries at the site in March 2025 and will deploy 100 workers per shift to step up production to 100MWh per month starting April 2028.

EV sales in Turkey are expected to almost double in 2024

• EV sales in Turkey are expected to nearly double in 2024, reaching 120,000 units compared to 72,179 units sold in 2023.
• Turkey was the fastest-growing EV market in Europe in 2023, with EV sales increasing by 833% from 2022.
• EVs accounted for 7.5% of total vehicle sales in Turkey in 2023, and their share is projected to rise to 17% in 2024.
• With the anticipated 120,000 EV sales, Turkey is on track to become the 6th largest EV market in Europe in 2024.
• Togg, Turkey’s first domestic EV maker, aims to boost its sales from 19,583 in 2023 to 45,000 in 2024, maintaining its market-leading position.
• Tesla, the second-best selling EV brand in Turkey in 2023, is estimated to deliver only 1,300 vehicles to the Turkish market in 2024.
• Volkswagen targets selling 7,000 EVs in Turkey this year, aiming to become one of the top five EV brands.
• Mercedes-Benz and Hyundai have set EV sales targets of 6,250 and 5,000 units respectively for the Turkish market in 2024.
• Chinese EV companies are also expected to increase their presence in the rapidly growing Turkish EV market.

EU probe into Chinese EV manufacturers ‘unfair’

• The China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) has said that the European Commission’s anti-subsidy investigation into Chinese EV makers is unfair, amounts to double standards and violates World Trade Organization rules.
• CCCME and its legal adviser, Brussels-based VVGB, have called on the European Commission to take no action following the investigation.
• The investigation was initiated by the Commission in the absence of a complaint from EU industry.
• The German Automobile Industry Association and several EV makers and industry representatives in the EU have expressed opposition to the investigation.
• Hildegard Mueller, head of the German association, told German media last week that the association opposes any EU tariffs on EV imports from China, and that they pose a risk of starting a trade war and threaten German jobs.
• Vice President of CCCME, Shi Yonghong, called the case ‘a perfect example of the EU’s double standards’.
• The EU currently provides billions of euros in subsidies to battery and EV makers within the EU.

India – New players to fuel EV growth in India over next few years

• India’s EV market witnessed remarkable growth in 2023, with sales nearly doubling and accounting for 2% of overall passenger vehicle sales.
• This surge is driven by government incentive schemes, expansion of EV charging infrastructure, rising urban consumer interest, and India’s push to meet green targets.
• Counterpoint Research predict a 66% increase in India’s EV sales in 2024, capturing a 4% market share in the passenger vehicle segment.
• EV sales data from FADA shows electric passenger vehicle sales jumped 91% to 90,996 units in FY 2023-24, while electric two-wheeler sales rose 30% to 947,087 units.
• Domestic battery manufacturing is expected to lower costs and further drive up EV sales in the Indian market.

Company News

Alpha HPA (A4N AU) A$1.1, Mkt Cap A$1bn – Australian government financing for High Purity Alumina Project

• Alpha HPA, has received conditional approval for loan facilities for Stage 2 of its HPA First Project from Australian government funding facilities.
• The NAIF and EFA have each committed A$160m for the project, alongside a combined $80m cost overrun facility.
• The facility will mature in 11 years.
• The HPA First Project aims to produce 4N and 5N aluminium products for sale into the semiconductor, lithium-ion and LED sectors.
• Stage 1 of the project is in production, with Stage 2 expected to boost output to 10ktpa HPAe.

Anglo American (AAL LN) 2,168p, Mkt Cap £28bn – After 3^rd sales cycle 2024 sales approximately 16% below 2023 levels

1. Anglo American reports that, provisionally, the third De Beers sales cycle of 2024 realised US$445m (2023 – US$542m) and that the previously reported provisional sales of US$430m and US$370m for the second sales cycle of 2024 have now been confirmed at US$431m.
2. Provisionally, after the first three sales cycles of 2024 sales of US$1.25bn are approximately 16% lower than the US$1.49bn achieved at the same stage in 2023.
3. Al Cook, CEO of the De Beers Group, confirmed that “Many diamond businesses are continuing to take a cautious approach to purchases amidst the uncertain economic landscape and the slow pace of growth in China”.
4. He added, however, “we saw a further uptick in our rough diamond sales in our third sales cycle, ahead of what is usually a slower period for rough diamond demand in the second quarter of the year”.

Anglo Asian Mining* (AAZ LN) 63.3p, Mkt Cap £73m – Q1 gold sales of 3,925oz of gold bullion as company awaits approval to restart tailings emplacement

BUY

• Anglo Asian Mining report Q1 production for the Gedabek mine and contract area in western Azerbaijan.
• The mine moved to a lower production rate last year when the government restricted the use of the existing tailings dam which lies downstream of the Gedabek town and mine.
• Opposition to the lifting of the tailings dam walls from villagers further downstream caused the government to impose restrictions on the use of the dam pending results of expert investigation.
• The expert report on the stability and integrity of the dam along with supporting documents were presented to the government by 14 March to the government for the raising of the tailings dam wall.
• We hope the government will grant permission shortly to enable the mine to restart full production.
• Production: .
  • Q1 production of 2,548 gold equivalent ounces vs 10,969oz last year. This includes the gold equivalent from by-product copper production.
  • Gold production 2,252oz vs 6,741oz yoy
  • Silver production 6,410oz vs 22,566oz yoy
  • Copper production reduced to 54t from 847t yoy
• Sales: Gold bullion: 3,925oz at $2,080/oz av. vs 5,719oz at $1,895/oz av. yoy
• Operating costs $9.6m
• Capital expenditure $0.7m
• Debt service $0.5m
• Net debt: $10.9m at end-March vs $10.2m highlights the impact of good cost control
• Net cash outflow: $0.7m due to sale of opening inventory along with strong cost control
• Inventory value: $2.0m at end-March 2024 vs $7.1m at end-December
• New mines:
• Gilar: First production from the new Gilar mine is now due in Q4
• Xarxar: JORC resource of 24.9mt at 0.48% for 119.1kt copper (in-situ) released in February with ~90% contained within the higher confidence Indicated category.
• Xarxar, Gilar, Garadag and Zafar should ramp to produce >35ktpa CuEq.

Conclusion:  Management have worked hard to contain costs while preparing documentation for the government over the integrity of its tailings dam. The team have also been working to advance the Gilar mine in preparation for production later this year. Further work to advance the Xarxar and Zafar projects is also ongoing. We expect the government to approve the restart of tailings emplacement shortly.

*SP Angel acts as nomad and broker to Anglo Asian Mining

Antofagasta (ANTO LN) 2,260p, Mkt Cap £22bn – Maintaining 2024 production guidance

• Copper production of 129,400t during the 3 months to 31^st March (2023 – 145,900t) at a net cash cost of US$1.93/lb after gold and molybdenum by-product credits (2023 – US$1.54/lb) leaves Antofagasta’s 2024 production guidance unchanged at 670-710,000t with cost guidance net of by-product credits maintained at US$1.60/lb.
• We note that production rates will need to increase, as previously indicated, later in the year to deliver this guidance range.
• By-product gold production amounted to 33,300oz while molybdenum output was 2,700t (2023 – 42,200oz and 2,500t).
• Lower overall copper output compared to Q1 2023 is attributed to “lower grades and increased ore hardness at Centinela, in line with the mine plan, as well as maintenance and cleaning activities on the Los Pelambres concentrate pipeline that delayed moving concentrate to the Company’s port facilities”.
• The Los Pelambres mine produced 55,300t of copper at a net cash cost of US$1.14/lb after allowing for by-product credits arising from 8,400oz of gold and 2,200t of molybdenum production.
• Comparative production at Los Pelambres in Q1 2023 was 59,300t of copper, 9,900oz of gold and 1,800t of molybdenum at a net cash cost of US$0.84/lb of copper.
• Centinela produced 45,000t of copper, with 23,000t in concentrates and 22,000t as cathode at a net cash cost after crediting 24,900oz of gold and 500t of molybdenum of US$2.39/lb (2023 -57,700t of copper at US$1.60/lb).
• Copper concentrate production at Centinela declined by 40% compared to Q1 2023 because of “increased ore hardness and lower grades in line with the mine plan, and unplanned maintenance at the concentrator, which was completed during the period” which reduced throughput rates.
• On the positive side, Centinela’s copper cathode production “was 13% higher year-on-year at 22,000 tonnes, with higher grades, plant throughput and recoveries all contributing to this result”.
• The Autocoya mine contributed 19,600t of copper production (Q1 2023 – 18,800t) at a cash cost of 2.61/lb (Q1 2323 – US$2.80/lb). The company says that the 7% decline in costs “related to higher production volumes, depreciation of the Chilean peso and reduced unit costs for key consumables, principally sulphuric acid”.
• At Zaldivar, attributable production “was 9,500 tonnes of copper, 5% below the same period in 2023, representing a balance of higher copper grades and ore tonnes treated, with lower recoveries”.  Cash costs “were $2.97/lb”.
• Zaldivar received approval, early in 2024 “for the separate DIA (Declaration of Environmental Impact) to extend the mining permit and, therefore, align the water and mining permits at Zaldívar. This approval ensures that this operation has rights to mine ore and extract water until 2025” production after that is “subject to the approval of the EIA” which was submitted in June 2023.

Conclusion: Production of 129,400t of copper during Q1 keeps Antofagasta on track to meet its 2024 production guidance of 670-710,000t with cost guidance net of by-product credits maintained at US$1.60/lb.

*An SP Angel mining analyst has previously visited a number of Antofagasta’s copper mines

Asiamet Resources (ARS LN) – 0.68p, mkt cap £17.5m – High grade grab samples from BKM

1. Asiamet Resources reports that during recent ‘due-diligence’ site visits to its BKM project in Kalimantan by “third parties in respect of proposals to either acquire or partner with the Company” confirmatory grab samples yielded high grade copper assays.
2. Four samples “collected from surface in the central area of the BKM deposit … [by one of the third parties] … assayed 24.0% and 23.3% Copper … [while] … Two additional samples collected from an outcrop of the nearby BKZ deposit assayed 7.20% Zn, 5.60% Pb, 74g/t Ag, 0.21% Cu, 0.16g/t Au and 25.6% Zinc, 16.1% Lead, 75g/t Ag, 0.43% Cu and 0.57g/t Ag”.
3. The company says that these results are “consistent with previous surface sampling and reinforce the upside potential of both the BKM and BKZ deposits. The BKM samples were taken from within the central location of the pit where the initial “Starter Pits” are to be mined in the current mine schedule”.
4. CEO, Darryn McClelland, explained that the “recent due diligence site visits have been very positive with good feedback received from all groups. The assay results from these grab samples are outstanding and, specifically for BKM, provide encouragement for the Company in the fact that samples of this grade are found at surface”.
5. He also clarified that “Our current mine plan targets mining of high grade starter pits from the BKM resource delivering high grade feed early in the life of the project allowing strong ramp up of copper production”.
6. Using a 0.2% copper cut-off-grade, the company’s May 2023 updated Feasibility Study reports a ‘Measured’ mineral resource of 20.6mt at an average grade of 0.7% copper, an ‘Indicated’ resource of 34.1mt averaging 0.6% copper and an ‘Inferred’ resource of 15mt at 0.6% copper with ‘Proven & Probable’ reserves of 40.8mt at an average grade of 0.7% total copper.
7. The May 2023 study describes the mining of a total of 38.4mt of ore at an average grade of 0.51% soluble copper delivering 156,000t of copper cathode over an initial 9.2 years mine life.

Conclusion: Asiamet reports a positive response to third-party due-diligence visits to its BKM project in Kalimantan with high grade surface samples collected by the visitors.  Despite the high headline grades from these grab samples, the overall reserve grade of 0.7% copper is, in our view, a more reliable guide to the operational grades likely to be encountered.

Empire Metals* (EEE LN) 8.1p, Mkt Cap £49m – Update of Pitfield JV structure

(Empire holds 70% of Pitfield, Century Minerals, which is run by two geologists holds the other 30%. One of these geologists works for Empire.)

• Empire provide an update on their 70/30 JV with Century Minerals over the Pitfield Project.
• The Group have revised terms to consolidate all minerals under one JV structure over the Project tenements.
• The original JV saw Century retain100% of the rights over mineral sands over the asset, with the JV holding rights to all bedrock mineral deposits, including titanium minerals.
• The new agreement limits third parties from exploring for other minerals in the future.
• Empire will pay a A$250k consideration for the redefinition of rights over the project.
• Management believes the updated structure will simply ownership and remove ambiguity over the asset.

*SP Angel acts as nomad and broker to Empire Metals

Rio Tinto (RIO LN) – 5,399p, Mkt cap £66bn – Production guidance maintained after a ‘stable’ first quarter

1. Rio Tinto is maintaining its 2024 production guidance across all commodity groups following a stable operating first quarter.
2. Commenting on global commodity market influences, Rio Rinto says that “China’s economic recovery has been uneven, prompting more government support to sustain growth and meet the target of around 5% GDP growth this year. The manufacturing sector remains strong, given increased industrial production and exports, while property activity remains weak, despite improved policy support”.
3. The “US market outlook remains optimistic … [while the] … eurozone economy stagnated in the fourth quarter of 2023 and is likely to have stayed weak in the first quarter of this year. It is expected to pick up gradually over the year on the back of a further decline in inflation, cuts in official interest rates, recovery in industrial production and investments in the energy transition”.
4. Iron ore production from the Pilbara operations in WA amounted to 77.9mt, 2% lower than Q1 2023 reflecting “planned ore depletion, predominantly at Yandicoogina … partially offset by productivity gains across other operations”.
5. “Iron ore prices declined by 27% over the quarter, while the average monthly price in the first quarter of $123/dmt (Platts CFR 62% Fe index) was 4% lower than last year’s fourth quarter. China’s domestic steel demand trended at levels similar to last year, but steel exports rose 30% year-on-year during the first two months and are likely to remain historically elevated”.
6. Iron ore shipments of 78mt during the quarter leave 2024 guidance unchanged in the 323-328mt “subject to the timing of approvals for planned mining areas and heritage clearances”.
7. Cost guidance for the Pilbara iron ore operations is also maintained in the range US$21.75-23.50/t.
8. Elsewhere, in February, Rio Tinto approved its US$6.2bn share of the capital development of the 60mtpa Simandou iron ore project in Guinea where first production is expected in 2025.
9. Mined copper production of 156,000t during the quarter is 7% above Q1 2023 and helps maintain annual guidance at 660-720,000t.
10. Production at both Kennecott and Escondida were both &% higher than Q1 2023 but unplanned issues with a conveyor, now resolved, at Kennecott led to a 32% decline on the preceding, December 2024 quarter’s output.
11. Copper output at Oyu Tolgoi “increased 8% from the first quarter of 2023 as the ramp-up in underground production continued. During the quarter, we delivered 1.3 million tonnes of ore milled from the underground mine at an average copper head grade of 1.67% and 9.0 million tonnes from the open pit with an average grade of 0.39%. This ramp-up is in line with the long-term plan to reach 500 thousand tonnes of copper production (stated as recoverable metal) for the Oyu Tolgoi underground and open pit mines for the years 2028 to 2036”.
12. “Bauxite production of 13.4 million tonnes was 11% higher than the first quarter of 2023 … reflecting] …. continuing improvements in operational stability at Weipa and Gove”.
13. Guidance for 2024 bauxite output is maintained in the range 53-56mt.
14. Alumina production of 1.9mt “was flat compared to the first quarter of 2023 but 3% lower than the previous quarter due to a breakage of the Queensland Gas Pipeline, operated by a third-party, which impacted our Gladstone operations in March. The pipeline has now been repaired and has been undergoing a monitoring process during March and April while production ramps up”.
15. Guidance for 2024 alumina output is maintained in the range 7.6-7.9mt.
16. Rio Tinto’s exploration projects cover 8 commodities across 18 countries with “first quarter focused on copper in Chile, Kazakhstan and Serbia, Nickel in Peru, Australia, Brazil and Canada, Lithium in Canada, US, Rwanda and Australia, potash in Canada and heavy mineral sands (HMS) in South Africa and Malawi”.

Conclusion: Rio Tinto is maintaining its 2024 production guidance across all its commodity groups with the company emphasising the stability of its operations. The company notes a patchy economic recovery in China and weakness in the eurozone but is more optimistic about the US.

Serabi Gold (SRB LN) 64p, Mkt Cap £44m – Reports highest quarterly gold output since 2021

1. Serabi Gold reports a 12.5% increase in Q1 2024 production of 9,007oz of gold (Q1 2023 – 8,005oz) which it describes as “the highest quarterly total reported since 2021”.
2. The core Palito operation contributed 5,136oz (Q1 2023 – 5,776oz) while increasing output from Coringa contributed 3,871oz (Q1 2023 2,229oz).
3. Serabi Gold is maintaining its FY2024 production guidance of 38-40,000oz of gold.
4. CEO, Mike Hodgson, explained that “There continued to be significant mine development at Coringa” and he welcomed the renewal of the trial mining licence for a further three year period and confirmed that Serabi Gold remains “focussed on securing the longer term Installation Licence”.
5. Mr. Hodgson also reported that the “ore sorter, purchased late last year, has arrived in Brazil and cleared customs. The crushing plant is being overhauled and the site for the classification plant (ore sorter and crushing) is now cleared and being prepared for start of the civil works. It is Serabi’s objective to have the plant operational by Q4-2024”.
6. At Coringa, “a six month underground exploration drilling campaign on the Serra ore body … [has started] … with the view to updating the geological resource”.
7. On exploration a “new IP geophysics and soil geochemistry programme at São Domingos, near the São Chico mine helped us better understand the past successful drilling results of 2021” which included the intersection of 7.15m at an average grade of 258g/t.
8. The new information from Sao Domingos helped to revise “our initial geological interpretation and are now very encouraged to return to this area once the rains conclude to drill this target and identify the source that has supported extensive artisanal workings in the area”.

Conclusion: Serabi Gold has reported its highest production quarter since 2021 and is maintaining its full year guidance of 38-40,000oz of gold production.

*An SP Angel analyst has visited the Serabi’s gold mining operations in Brazil

Tertiary Minerals* (TYM LN) 0.11p, Mkt Cap £2.8m – Drilling begins at Konkola West, Zambia

• Tertiary announces today that drilling has now begun at Konkola West in Zambia.
• The Group are targeting deep dipping extensions of the Musoshi-Konkola deposits.
• KoBold, which is conducting the drilling as part of an earn in agreement with Tertiary, suggests the licence may host a down dipping extension of the Lower Roan formation, which hosts the predominant copper mineralisation to the east.
• We look forward to the assay results with anticipation.

*SP Angel acts as Nomad and Broker to Tertiary 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

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 of less than 15%