SP Angel Morning View -Today’s Market View, Wednesday 19th February 2025

Gold pushes past record highs amid escalating calls for a US audit

MiFID II exempt information – see disclaimer below

Caledonia Mining (CMCL LN) – CFO appointment

Gemfields Group (GEM LN) – Finance Minister confirms suspension of export duty on Zambian gemstones

Glencore (GLEN LN) – 2024 results impacted by lower coal prices

Ivanhoe Mines (IVN CN) – Platreef expansion study results

Lundin Gold (LUG CN) – Reserves increased at Fruta del Norte following drilling

Mineral Resources (MIN AU) – FY25 interims

Rupert Resources (RUP CN) – PFS results for Ikkari as first pour targeted for 2030

Sovereign Metals* (SVML LN) – Kasiya graphite refractory market properties confirmed

Tirupati Graphite (TGR LN) SUSPENDED – Removal of director

Wheaton Precious Metals (WPM LN) – Production guidance and growth plans going forward

Gold ($2,944/oz) pushes past record highs amid escalating calls for a US audit

• Gold prices are pressing higher, breaking through recent record highs of $2,942/oz.
• There is increased discussion of revaluing the US gold reserves, from the current $42/oz to today’s spot prices.
• We note that gold climbed >180% over the two years since it was revalued in 1973.
• There is suggestion of this enabling the Treasury’s ability to borrow under the debt ceiling, pushing the ‘Xdate’ of debt renegotiation back.
• Elon Musk is calling for an audit into the Fort Knox gold reserves, currently stated at 4,580t.
• Scott Bessent, Treasury Secretary, has also been a vocal advocate of gold.
• Increased awareness of the potential value of gold is likely supporting inflows to the metal.
• ETF inflows are ticking up as gold continues to gain traction with retail investors, but remain well below 2020 levels.
• Meanwhile, central banks continue to buy, amid sustained geopolitical tensions, and rising expectations of tariffs.
• China boosted holdings again in January, with India and Poland both buying.

Mitsui takes stake in Rio’s Rhodes Ridge project in vote of confidence in iron ore

• Japanese trading house Mitsui has taken a US$5.3bn, 40% stake in Rhodes Ridge.
• The acquisition leaves Rio with a 50% stake.
• The project is set to begin production in 2030.
• Rhodes Ridge holds a resource at 6.7bnt at 62% Fe, expected to produce 40mtpa before ramping up to 100mtpa potentially.
• The acquisition highlights continued demand for high-grade iron ore assets.

Economics

Currencies

US$1.0452/eur vs 1.0466/eur previous. Yen 151.79/$ vs 151.96/$. SAr 18.338/$ vs 18.433/$. $1.263/gbp vs $1.262/gbp. 0.636/aud vs         0.636/aud. CNY 7.285/$ vs 7.281/$.

Dollar Index 106.993 vs 106.942 previous.

Precious metals:         

Gold US$2,940/oz vs US$2,910/oz previous

Gold ETFs 83.7moz vs 83.7moz previous

Platinum US$983/oz vs US$989/oz previous

Palladium US$985/oz vs US$986/oz previous

Silver US$33.0/oz vs US$32.5/oz previous

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

Base metals:   

Copper US$9,458/t vs US$9,409/t previous

Aluminium US$2,680/t vs US$2,641/t previous

Nickel US$15,360/t vs US$15,330/t previous

Zinc US$2,892/t vs US$2,869/t previous

Lead US$1,982/t vs US$1,987/t previous

Tin US$32,750/t vs US$32,845/t previous

Energy:           

Oil US$76.3/bbl vs US$75.3/bbl previous

• Crude oil prices edged higher after media reported that certain OPEC+ delegates said the cartel may postpone the gradual unwinding of 2.2mb/d of cuts, which are set to begin in April at a planned rate of 138kb/d per month.
• European natural gas prices remain elevated on colder weather as France’s nuclear generation edged up 1% w/w to 80% of the country’s 61.4GW maximum capacity.

Natural Gas €49.8/MWh vs €47.7/MWh previous

Uranium Futures $65.4/lb vs $66.4/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$106.8/t vs US$107.0/t

Chinese steel rebar 25mm US$485.8/t vs US$486.2/t

HCC FOB Australia US$187.8/t vs US$188.5/t

Thermal coal swap Australia FOB US$106.5/t vs US$105.0/t

Other:  

Cobalt LME 3m US$21,550/t vs US$21,550/t

NdPr Rare Earth Oxide (China) US$59,577/t vs US$59,544/t

Lithium carbonate 99% (China) US$9,952/t vs US$9,958/t

China Spodumene Li2O 6%min CIF US$815/t vs US$815/t

Ferro-Manganese European Mn78% min US$1,005/t vs US$1,005/t

China Tungsten APT 88.5% FOB US$343/mtu vs US$338/mtu

China Graphite Flake -194 FOB US$430/t vs US$430/t

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

Europe Ferro-Vanadium 80% US$24.8/kg vs US$24.8/kg

China Ilmenite Concentrate TiO2 US$294/t vs US$295/t

Global Rutile Spot Concentrate 95% TiO2 US$1,543/t vs US$1,543/t

Spot CO2 Emissions EUA Price US$65.1/t vs US$65.1/t

Brazil Potash CFR Granular Spot US$317.5/t vs US$317.5/t

Germanium China 99.99% US$2,725.0/kg vs US$2,725.0/kg

China Gallium 99.99% US$385.0/kg vs US$385.0/kg

Battery News

Company News

Caledonia Mining (CMCL LN) 835p, Mkt Cap £159m – CFO appointment

• Caledonia Mining reports that CFO, Chester Goodburn, will relinquish the role on 24^th March to be replaced by former Centamin CFO, Ross Jerrard.
• Mr. Goodburn is a long term member of Caledonia Mining’s management team serving as Financial Manager and Chief Information Officer prior to his appointment as CFO in July 2022.
• Mr. Jerrard was appointed as CFO of Centamin in 2016 “until its acquisition by AngloGold Ashanti Plc in November 2024 for a deal value of $2.5 billion”. He is “a member of the Institute of Chartered Accountants of Australia and New Zealand and the Institute of Chartered Accountants of Zimbabwe”.
• Thanking Mr. Goodburn for his “substantial contribution to Caledonia’s growth since he joined us in 2014”, CEO, Mark Learmonth, welcomed Mr. Jerrard who, he said, “brings a depth and breadth of experience which will be invaluable to Caledonia as we advance our strategy to become a mid-tier, Zimbabwe-focussed gold producer”.

*SP Angel mining analysts have visited Caledonia’s mining operations in Zimbabwe

Gemfields Group (GEM LN) 5.75p, Mkt Cap £67m – Finance Minister confirms suspension of export duty on Zambian gemstones

(Montepuez Ruby Mining Limitada in Mozambique (“MRM”) and which is 75% owned by Gemfields, the Kagem emerald mine in Zambia is 75% owned by Gemfields)

• Gemfields reports that, Zambia’s Finance Minister has suspended the 15% export duty on Gemstones with immediate effect.
• The company’s announcement confirms that the suspension means that “the 15% export duty on precious gemstones will no longer apply to the Zambian emeralds mined by Kagem Mining Limited (“Kagem”) which is 75% owned by Gemfields and 25% owned by the Zambian Government’s Industrial Development Corporation”.
• CEO, Sean Gilbertson, thanked “President Hakainde Hichilema’s government for their prompt and impressive action in addressing the 15% export duty on precious gemstones”.
• He commented that the “Zambian emerald sector has delivered phenomenal growth over the last 16 years and is today – by a significant margin -the world’s largest emerald exporter”.
• Gemfields had previously contrasted the impact of the export duty on the effective tax rate applied to Zambian emerald production compared with rates in other emerald producing countries where “Brazil’s aggregate tax on revenues is 2% (in the form of mineral royalty) and Colombia’s aggregate tax on revenues is 2.5% … in addition to corporation taxes of 34% and 33% respectively”.

Conclusion: Suspension of a 15% levy on exports of Zambia’s emerald production appears to end confusion on the issue.

Glencore (GLEN LN) 332.25p, Mkt cap £43bn – 2024 results impacted by lower coal prices

• Reporting what CEO, Gary Nagle, described as a “a strong year” in 2024, Glencore reports a 16% decline in adjusted EBITDA to US$14.4bn (2023 – US$17.1bn) and a net loss of US$1.6bn (2023 – profit US$4.3bn) and year end net debt of US$11.2bn (2023 – US$4.9bn).
• EBIT, on an adjusted basis, declined by 33% to US$6.9bn (2023 – US$10.4bn) and a net attributable loss of US$1.6bn (2023 – profit US$4.3bn).
• Mr. Nagle ascribes the reduction in EBITDA to “lower average energy coal prices year over year” with the company’s announcement citing “substantial declines in key thermal coal pricing”.
• The company reiterates that in 2024 it “delivered full year production numbers within their original guidance ranges”.
• Industrial activities delivered around 74% (US$10.6bn) of the overall adjusted EBITDA with ‘Metals & Minerals’ contributing US$5.8bn (2023 – US$5.4bn); Energy and Steelmaking coal – US$5.3bn (2023 – US$8.5bn) offset by a of US$0.6bn reduction for ‘Corporate & Other’ costs (2023 – US$0.7bn).
• EBITDA attributable to marketing in 2024 was US$3.8bn (2023 – US$3.9bn).
• Within its ‘Metals & Minerals’ sector, Glencore’s copper business contributed US$3.8bn (64%) of the adjusted EBITDA (2023 – US$3.9bn) with zinc delivering an additional US$1.4bn (24%) (2023 – US$1bn) with the balance provided by the nickel operations.
• EBITDA of US$5.3bn from the ‘Energy & Steelmaking coal business is dominated by the US$2.8bn (~56%) contribution of the Australian thermal coal operations supported by a further US$1bn from the Canadian steelmaking coal business.
• Mr. Nagle confirms that Glencore is recommending “a $0.10 per share (c.$1.2 billion) base cash distribution, together with a ‘top-up’ buyback of $1.0 billion (c.$0.082 per share). The top up returns will be affected by way of a buyback to be concluded before the release of our H1 2025 results on 6 August”.
• He concluded his remarks asserting that “The strength of our diversified business model across our industrial and marketing businesses, which focus on the commodities needed for today and tomorrow, has proved itself adept in a range of market conditions, giving us a solid foundation to navigate successfully the near-term macroeconomic environment and be well positioned for the future”.
• In a separate announcement, Glencore reports the appointment of a Colombian lawyer and former Deputy Minister of Justice in Colombia, Maria Margarita Zuleta, as a non-executive director. Ms Zuleta was formerly “General Counsel of Prodeco during its ownership by Glencore and Xstrata … [and] … has been a professor at the School of Government at the Universidad de los Andes”, Bogota since 2017.

Ivanhoe Mines (IVN CN) C$16, Mkt Cap C$22bn– Platreef expansion study results

• Ivanhoe report their results from their Platreef expansion study.
• Phase 1 of the PGM operation in South Africa.
• The Company expects Phase 1 production to begin in 4Q25, with Phase 2 expansion brought forward to 2027.
• Phase 1 and 2 will see 4.1mtpa processed, producing 450koz for a post-tax NPV8 of US$1.4bn for an IRR of 20%.
• The 4.1mpta plant C1 costs expected at $599/oz 3PE & Au, net of nickel and copper by-product.
• Phase 1 2 and 3 combined will see production of 10.7mpta (PEA stage), yielding a post-tax NPV8 of US$3.2bn and 25% IRR to boost production to 1moz.
• The larger operation is expected to see cash costs of $511/oz.
• Company assumes long-term metal price assumptions of $1,200/oz Pt, $1,130/oz Pd, $2,170/oz Au.

Lundin Gold (LUG CN) C$38, Mkt Cap C$9.2bn– Reserves increased at Fruta del Norte following drilling

• Lundin Gold increased inferred resources by 59% to 2.36moz contained, with measured and indicated resources rising to 7.06moz contained.
• Proven and probably reserves increased to 5.54moz contained at an average grade of 7.8g/t Au following depletion of 0.54moz over 2024.
• Inferred resources boosted from Fruta del Norte South.
• Reserve increase stemmed from ‘successful conversion drilling, modifications to the mine design, and some changes to technical parameters.’

Mineral Resources (MIN AU) A$24, Mkt Cap A$4.8bn – FY25 interims

• Revenue fell 9%yoy to A$2.3bn, reflecting lower realised iron ore and lithium prices.
• EBITDA was down 55% at A$302m.
• PAT came in at -A$807m, down from A$530m in 1HFY24.
• Net loss includes a A$352 in post tax impairment primarily related to Bald Hill Lithium Mine placed on care and maintenance in November.
• Mining services delivered record EBITDA of A$379m (+49%yoy) with two new contracts signed and four existing external contracts renewed.
• Iron ore division recorded a 11% increase in shipped volumes (9.7wmt) but at lower realised prices of US$83/dmt (-25%yoy).
• Onslow Iron produced 6.3mt and shipped 4.6mt.
• Lithium division recorded shipment of 261kt SC6 (+28%) with average realised price of US$820/dmt (-52%yoy).
• A$1.1bn upfront payment for the sale of a 49% interest in Onslow Iron haul road and A$780m initial cash payment for the gas exploration licenses disposal to Hancock Prospecting received during the period.
• Post tax CFO (pre financing) was -A$467m (1HFY24: A$750m).
• Closing cash balance stood at A$720m and net debt of A$5.1bn; the Company maintained access to A$800m in undrawn debt facilities.
• Interim dividends suspended to maintain liquidity.
• Onslow Iron attributable production guidance revised lower following cyclone related disruptions to 8.8-9.3mt, from 10.5-11.9mt, with costs adjusted to A$60-70/t from A$58-68/t.
• The Company will upgrade the Onslow Iron haul road repairing flood damaged parts of the road and resurfacing the entire route with asphalt in 2HFY25; works expected to be completed in September 2025.
• The stock sold off on the news and was down >20% in Australia.

Rupert Resources (RUP CN) C$4.9, Mkt Cap C$1.1bn– PFS results for Ikkari as first pour targeted for 2030

• Finnish gold developer Rupert report a maiden reserve at Ikkari of 52mt at 2.1g/t Au for 3.5moz Au.
• The Company report a post tax NPV5 of US$1.7bn, IRR of 38% using a $2,150/oz gold price, rising to NPV5 of US$2.5bn, IRR of 49% at $2,650/oz Au.
• LOM of 20 years, producing average 227kozpa from the open pit over the first 10 years.
• Initial CAPEX of US$575m, AISC of $918/oz over LOM and $717/oz over first 10 years
• Strip ratio expected at 3.66:1 over the open pit, processing 3.5mtpa, with long hole open stoping to follow, processing 2mtpa.
• Recoveries expected at 96%, with coarse grinding at 100 microns.
• Company expects submission of EIA and DFS initiation in 2H25, 24 month permitting timeline and 2.5 years to construction for first pour in 2030.
• Agnico Eagle hold a 13% stake in Rupert.

Sovereign Metals* (SVML LN) 41p, Mkt Cap £245m – Kasiya graphite refractory market properties confirmed

(Sovereign currently holds 100% of the Kasiya project. Malawi has 10% free carry right. Rio Tinto acquired an initial strategic interest of 15% for A$40m mid 2023 and has recently invested a further A$19.2 to move up to 19.9%)

STRONG BUY – Valuation 55p

• Testwork on graphite from the Kasiya Rutile-Graphite Project in Malawi confirms chemical and physical properties required for use in refractory applications.
• Testwork was completed by two leading European laboratories, namely, ProGraphite GmbH and Dorfner Anzaplan in Germany.
• The concentrate contained very low sulfur levels and no other impurities of concern.
• Additionally the material was found to be of high purity, high oxidation resistance, high ash metling temperatures and low levels of ‘springback’ from compression.
• The study builds on the previous work that found the material suitable for battery anode applications.
• Refractory graphite products use larger flake material with three applicable fractions including +300 microns, +180 microns and +150 microns.
• Kasiya flake distribution reported in 2023 PFS showed that medium and larger fractions accounted for ~68% of total including 30% for +300, 37% for +180 and 12% for +150.
• Testwork results will be used for customer engagement and offtake discussions.
• Refractory market graphite trades at premium to fine graphite.
• The Company quotes US$564/t for battery anode material reported by Syrah in 4Q24 and $1,193/t for larger flake refractory graphite concentrate using Benchmark Mineral Intelligence data.
• Large flake graphite is added to refractories to line furnaces and vessels for high temperature processing across a wide range of industries including iron and steel production, non-ferrous metals, cement and lime, glass, and chemicals.
• Steel sector accounts for 60% of global refractories demand.

Conclusion: Successful Kasiya graphite concentrate testwork confirms chemical and physical properties of the product required in refractory applications. Refractory related graphite concentrate attracts premium while good test results complement earlier testwork that found Kasiya finer material suitable for battery anode applications. Results will now be used for potential offtake discussions.

*SP Angel act as Nomad and broker to Sovereign Metals. The analyst has visited the Kasiya mine site. We highly recommend the Malawi coffee beans sold in Lilongwe airport.

Tirupati Graphite (TGR LN) SUSPENDED – Removal of director

• Following news, in January, of the suspension of Shishir Poddar, a founder of the company, as a director, the company reports today that “it has terminated … [his role] … as co-CEO, with immediate effect”.
• Today’s announcement confirms that “The Company reserves its right to continue its investigations into all allegations it has received to date, which may result in further remedial or legal actions”.
• “Anthony James Nieuwenhuys will assume the role of sole CEO and lead the Company during the next phase of its development”.

Conclusion: Tirupati is undergoing substantial management change. We look forward to a more comprehensive update on the operation of the company and the state of its financial arrangements.

Wheaton Precious Metals (WPM LN) 5,040p, Mkt Cap £29bn– Production guidance and growth plans going forward

• Wheaton reports the production of 633koz gold equivalent in 2024.
• Company points to strong performance from Salobo as a primary driver of record quarterly production in Q4.
• Higher grades from Pampacancha partially offset lower output from San Dimas and Zinkgruvan on lower grades.
• The Company provides 2025 guidance of 600-660koz GEO in 2025, ramping up to 870koz GEO by 2029.
• 2025 production increase supported by Antamina’s higher silver grades, and inaugural production from Blackwater, Goose, Mineral Park and Platreef.
• Aljustrel is expected to resume production in 3Q25, whilst lower production expected from Constancia.
• Over the longer term, production growth of 40% to 2029 expected to be driven by growth from operating assets, including Antamina, Alkustrel and Marmato, development assets including the aforementioned mines and Fenix, Kurmuk and Kone, alongside pre-development assets including El Domo and Copper World.
• 2030-34 production then expected to rise to average 950koz GEO.

LSE Group Starmine awards for 2024 commodity forecasting:

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

No.2 in Base Metals: SP Angel mining team awarded No 2. ranking for Base Metals forecasting in LSEG Annual Starmine Award for Reuters Polls 2024

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

Arthur Parish – Arthur.Parish@spangel.co.uk – 0203 470 0476

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

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