SP Angel Morning View -Today’s Market View, Wednesday 24th April 2024

Soft US PMIs lift market sentiment supporting copper on US dollar selloff

MiFID II exempt information – see disclaimer below

Atlantic Lithium* (ALL LN) – Quarterly activities and cash flow report and management reshuffle

Cornish Metals* (CUSN LN) – Enhancing opportunities for stakeholder dialogue as it moves towards a new PEA for South Crofty

Ecora Resources (ECOR LN) – Q1 Trading Update as Kestrel production resumes

Fura Gems (FURA CN) – Ruby at Montepuez in Mozambique blocked by workers

Ionic Rare Earths (IXR AU) – A$5.5 equity raise

Mineral Resources (MIN AU) – Q3 Update as cost reductions initiated at lithium operations

Oriole Resources* (ORR LN) – Exploration update from Mbe gold project

Thor Energy (THR LN) – Completion of IVR Stage 1 earn-in on the Molyhil project, Northern Territory

Copper prices strengthen as Chile trims production forecasts.

• Copper prices have strengthened again to $9,800/t, up 1% overnight having sold off into yesterday.
• Chile slashed production forecasts for 2024 to 5.51mt from 5.63mt, adding to supply concerns in an already tight concentrate market.
• Hedge funds had hiked bullish copper bets to record levels last week, with some profit taking likely explaining the bounce off recent highs of $9,935/t.
• UK and US sanctions have been pointed to as an additional catalyst for the recent rally, with Russia producing 4% of global copper supply.

Iron ore pares gains as China steel market weakness persists

• Singapore iron ore fell 3% to $112/t, whilst Dalian 62% iron ore hovering around $117/t.
• Steel consumption in iron ore slowed as heavy rainfall hit the south of China.
• Iron ore volumes remain elevated in advance of the May Day holiday.
• Industry players remain hopeful of an increase in support from Beijing to prop up the property sector, although this is yet to materialise.
• Coking coal and coke fell 3% and 1.7% respectively.

IG TV:              Gold and Copper. 10/04/2024:      https://youtu.be/KuGSbDqWglk?si=-8iikkOHxbbLSnPZ

Sharepickers TV:  Shortage of Copper. 19/04/2024:  https://www.youtube.com/watch?v=-LGCV1ccFOM

Podcasts: 19/04/2024  https://audioboom.com/posts/8493157-john-meyer-this-signifies-there-s-a-shortage-of-copper

    12/04/2024  https://audioboom.com/posts/8489836-john-meyer-dismisses-bulletin-board-rumours-of-dead-sheep-cows-in-mine-as-rubbish

*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts. We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate. SP Angel acts as Broker/Nomad or both for Anglo Asian Mining, Kodal Minerals, Power Metals Resources.

Economics

US – Soft PMI numbers released yesterday fuelled a pick up in risk sentiment on Tuesday.

• Preliminary PMIs came in below estimates while details of the report pointed to a slowdown in employment and inflation in April.
• Labour number dropped for the first time since June 2020 with a reduction led by services sector where employment fell them most since mid-2020.
• Inflation slowed down in both manufacturing and services sectors.
• The focus is on March PCE numbers due this Friday with estimates for March measure to come in at 0.3%/2.6% for headline and 0.3%/2.7% for core data.
• Preliminary Manufacturing PMI (Apr/Mar/Est): 49.9/51.9/52.0
• Preliminary Services PMI (Apr/Mar/Est): 50.9/51.7/52.0
• Preliminary Composite PMI (Apr/Mar/Est): 50.9/52.1/52.0

Japan – Ongoing depreciation in the currency risks a government intervention, according to one of the country’s former top currency officials.

• “Should this trend continue, intervention will come… we are very close,” Mitsuhiro Furusawa, former vice minster of finance for international affairs, said.
• Finance Minister Shunichi Suzuki reiterate on Tuesday that authorities are prepared for action to address the situation.
• The yen is trading close to 155, the lowest level in more than three decades.
• The central bank is due to release a policy statement on Friday with consensus for no change.

Germany – Business outlook climbed to a one year high in April on prospects for looser monetary policy.

• IFO Current Assessment (Apr/Mar/Est): 88.9/88.1/88.7
• IFO Expectations (Apr/Mar/Est): 89.9/87.7/88.9

Australia – The A$ is rising on the back of hotter than expected inflation numbers released for Q1/24.

• Yields on more policy sensitive three year sovereign notes climbed the most since May.
• Markets no longer expect a rate cut in December.
• CPI (%qoq, Q1/Q4/Est): 1.0/0.6/0.8
• CPI (%yoy, Q1/Q4/Est): 3.6/4.1/3.5
• Core CPI (%qoq, Q1/Q4/Est): 1.0/0.8/0.8
• Core CPI (%yoy, Q1/Q4/Est): 4.0/4.2/3.8

Ukraine – Senate passed the military aid bill yesterday with US officials saying some aid for Kyiv will be delivered within days.

• The bill for $95bn also included military assistance to Israel and the Indo-Pacific region.
• President Biden is expected to sign the bill off later today.

Currencies

US$1.0693/eur vs 1.0688/eur previous. Yen 154.89/$ vs 154.84/$. SAr 19.130/$ vs 19.207/$. $1.244/gbp vs $1.237/gbp. 0.651/aud vs 0.646/aud. CNY 7.246/$ vs 7.246/$.

Dollar Index 105.83 vs 106.10 previous.

Precious metals:         

Gold US$2,324/oz vs US$2,357/oz previous

Gold ETFs 81.3moz vs 81.3moz previous

Platinum US$918/oz vs US$927/oz previous

Palladium US$1,027/oz vs US$1,013/oz previous

Silver US$27.36/oz vs US$28/oz previous

Rhodium US$4,725/oz vs US$4,750/oz previous

Base metals:   

Copper US$ 9,834/t vs US$9,876/t previous

Aluminium US$ 2,596/t vs US$2,663/t previous

Nickel US$ 19,230/t vs US$19,090/t previous

Zinc US$ 2,818/t vs US$2,829/t previous

Lead US$ 2,205/t vs US$2,189/t previous

Tin US$ 32,095/t vs US$34,950/t previous

Energy:           

Oil US$88.5/bbl vs US$86.0/bbl previous

• Crude oil prices edged higher after the API reported a 3.2mb w/w draw (vs +1.8mb exp) to US crude stocks.
• European energy prices fell as French nuclear reactor operating levels rose 4% w/w to 69% of 61.4MW capacity.
• EQT, the largest US gas producer, cut its FY24 production guidance by 100bcfe to 2.1-2.2Tcfe in an extension to last month’s plan to curtail c.1bcf/d of gross production in response to low US natural gas prices.

Natural Gas €29.1/MWh vs €29.7/MWh previous

Uranium Futures $89.4/lb vs $89.3/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$113.3/t vs US$117.6/t

Chinese steel rebar 25mm US$517.5/t vs US$516.1/t

Thermal coal (1st year forward cif ARA) US$116.6/t vs US$121.9/t

Thermal coal swap Australia FOB US$136.5/t vs US$143.0/t

Hard Coking Coal Australia FOB US$326.0/t vs US$326.0/t

Other:  

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

NdPr Rare Earth Oxide (China) US$53,686/t vs US$53,289/t

Lithium carbonate 99% (China) US$15,112/t vs US$15,117/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$330/mtu vs US$323/mtu

China Graphite Flake -194 FOB US$480/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$328/t vs US$329/t

China Rutile Concentrate 95% TiO2 US$1,415/t vs US$1,415/t

Spot CO2 Emissions EUA Price US$68.9/t vs US$68.9/t

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

Battery News

New report highlights distribution of global EV market

• The IEA sees full EVs and plug-in hybrids together accounting for one in five light-duty vehicles sold in 2024.
• The report also highlights how the market is currently unevenly distributed:
  • 60% of global EV sales for 2024 are expected to be in China;
  • 25% of sales are predicted to be in Europe;
  • The US market is expected to account for 10% of global sales.
• The IEA also predicts that global sales will experience a 21% growth from figures in 2023.

BYD reportedly not eligible for new Indian EV policy

• India have introduced a new policy to lower tariffs on imported EVs if the manufacturer commits to $500mn in investment to set up a production facility in the country.
• Currently India taxes imported vehicles up to 100% depending on price.
• The new policy will reduce duties on passenger EVs, with an import price of $35,000 and up, to 15%.
• According to a senior government official, has said that Chinese EV makers are likely to miss out on the benefits due to concerns of national security.

Norway redesigns subsidies for commercial EVs

• Norway has launched a new funding programme for commercial EV, which awards funds on a monthly basis.
• The business development agency, Enova, will subsidise the procurement of 108 heavy-duty EVs, at a cost of NOK136.5m.
• The new programme is designed as a competition, with Enova supporting the procurement of EVs that promise the “greatest CO2 reduction per krone”.
• The maximum subsidy rate is 60% of the additional costs compared to a comparable diesel vehicle.

Company News

Atlantic Lithium* (ALL LN) 20.45p, Mkt Cap £134m – Quarterly activities and cash flow report and management reshuffle

(Ewoyaa Ownership: 40.5% Atlantic, 40.5% Piedmont, 6% MIIF Sovereign Wealth fund, 13% government of Ghana)

• Atlantic Lithium report progress at their Ewoyaa lithium project in Ghana along with “Overwhelmingly strong local community support demonstrated at the Environmental Protection Agency Scoping Public Hearing” in Ghana.
• The company spent A$1.55m in the quarter to end March with $8m spent on admin and other operating activities for the 9-months.
• The team also spent A$5.4m on exploration, feasibility and development costs. This was offset by A$6.96m from Piedmont’s contributions under the farm-in arrangement.
• Atlantic raised A$7.6m through the issue of equity through the quarter to leave A$17.1m by end March.
• The team have completed the Ewoyaa Feldspar Study and Downstream Conversion Study which has been submitted to Ghana’s Minerals Commission.
• Management are now working with engineering contractors ahead of the EPCM tender process.
• Primero Group has been selected for the FEED on the basis of the firm’s experience in delivering DMS ‘Dense Media Separation’ process plants with comparable flow sheets to Ewoyaa
• Exploration: assays have been received for 9,734m done last year covering the Dog-Leg target, Okwesi, Anokyi and Ewoyaa South-2 deposits. The results are not in the current 35.3Mt, 1.25% Li2O JORC resource.
  • “Multiple high-grade and broad drill intersections reported in results, including at Dog-Leg, where drilling intersected a shallow-dipping, near surface mineralised pegmatite body with true thicknesses of up to 35m.
  • Highlight intersections include 69m at 1.25% Li2O from 45m and 83m at 1% Li2O from 36m at Dog-Leg.”
• Management changes: The team recently received approval for the new Senya Beraku prospecting licence.
  • Iwan Williams has been promoted to General Manager, Exploration.  Abdul Razak is also promoted to Exploration Manager, Ghana
  • Len Kolff has stepped down from his role of Head of Business Development & Chief Geologist and left the company. Len Kolff has been acting as the company’s competent person.
• Offtake:
  • Strong interest for spodumene concentrate to be produced at Ewoyaa continues to be demonstrated from a range of industry players around the world through the Company’s ongoing competitive offtake partnering process to secure funding for a portion of the remaining 50% available feedstock from Ewoyaa.
  • Formal bids from remaining interested parties expected to be received in the coming weeks ahead of final negotiations.
• Assore offer:
  • Purchase of 24.3m Atlantic Lithium shares at a premium by major shareholder Assore International Holdings from strategic funding partner Piedmont Lithium Inc.
  • Further purchase of the Company’s shares from members of the Company’s senior leadership team, equating to a total value of A$5,192,393 (£2,794,015) since March 2023..

Conclusion:  Atlantic are making steady progress towards the award of the EPCM contract for the DMS plant and other facilities for the new Ewoyaa mine. We await news on the sale of the offtake contract. Assore appear to be waiting in the wings before potentially making another run on the company. Management continue to buy shares in the company giving an additional degree of confidence in the business.

*SP Angel acts as Nomad to Atlantic Lithium. Two mining analysts from SP Angel recently visited the Ewoyaa mine site in Ghana and drove onto Takoradi to check the quality of the road to port. Our analysts also visited the Ministry of Minerals Commission and MIIF, the Ghana Minerals Income Investment Fund.

Cornish Metals* (CUSN LN) 9.75p, Mkt Cap £52m – Enhancing opportunities for stakeholder dialogue as it moves towards a new PEA for South Crofty

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• Cornish Metals has announced its new interactive hub to provide existing and potential future investors and other stakeholders with more comprehensive access to information on the company and its continuing work to resume production the historic South Crofty tin mine and explore the nearby United Downs project.
• As well as providing “a single integrated platform” containing the company’s regulatory announcements, financial reports and presentations, the new hub “also provides an interactive online experience allowing our stakeholders to comment on the Company and ask the management team questions via a communication portal”.
• Interim CEO, Ken Armstrong explained that it would “allow us to share more video content, information and insights about the tin market and our on-site activities as we advance the South Crofty tin project through to a potential construction decision”.
• Access to the hub and sign-on information is available at investors.cornishmetals.com.
• Currently, Cornish Metals is working to deliver a Preliminary Economic Assessment (PEA) during the current quarter for the potential resumption of production at South Crofty based around a revised mineral resource estimate of

• • Indicated Resource – 2,896,000t at an average grade of 1.50% tin (2021 – 2,084,000t at an average grade of 1.59% tin); and
  • Inferred Resource – 2,626,000t at an average grade of 1.42% tin (2021 – 1,937,000t at an average grade of 1.67% tin).

• The PEA should be the first of a series of increasingly detailed feasibility studies leading up to the full financing and restart of the South Crofty tin mine which the company has previously indicated could be by late 2026.
• De-watering of the historic workings started in October last year with shaft refurbishment underway and drilling is continuing on the recently discovered ‘Wide Formation’ mineralisation south of the mine which may lead to future resource increases.

Conclusion: Enhanced stakeholder communication via the new investor hub is timely as Cornish Metals works towards a resumption of production at the historic South Crofty mine with a PEA expected during the current quarter.

*SP Angel acts as Nomad and Broker. An SP Angel analyst formerly worked in the South Crofty tin mine in the 1980s and holds shares in Cornish Metals

Oriole Resources* (ORR LN) 0.34p, Mkt cap £13m – Exploration update from Mbe gold project

• Oriole provides an exploration update from its Mbe gold project in Cameroon.
• Oriole has been working alongside its earn-in partner BCM at Mbe, targeting a 3km target which previously yielded sample highs up to 257g/t Au.
• The Company has now completed an infill soil sampling programme, over a sample spacing of 100m x 25m, collecting 4,537 samples.
• Sampling results are expected later this quarter, which will support the preparation of a follow-up trenching programme due in 2Q24.
• Ground geophysical data has highlighted additional sub-cropping vein sets, believed to increase the width of the 3km target to 2km.
• Two additional potentially mineralised corridors have now been identified at Mbe, named MB_Target A and MB_Target B, which the Company geologists believe to lie parallel to the main target zone.
• Oriole is currently undertaking an additional infill soil sampling programme over 100m x 50m spacing across an extended 12.5km zone, targeting the aforementioned areas.

Conclusion: Oriole continues to explore and expand the potential of their Mbe gold project in Cameroon, which has returned high grade rock chip and trenching sample results to date. The Team has now extended their 3km-long prospect’s width significantly from 700m to 2km, whilst also adding two additional targets lying in parallel to the east. Assay results are expected in May which will support additional trenching before a maiden drilling programme for the upcoming field season.

*SP Angel acts as Broker to Oriole Resources

Ecora Resources (ECOR LN) 80p, Mkt cap £202m – Q1 Trading Update as Kestrel production resumes

• Royalty company Ecora reports their Q1 trading update for the period to March 31^st 2024.
• The Company reports portfolio contributions of $19.5m, up 117% qoq as Kestrel production resumes on Ecora’s royalty land.
• Core asset contributions fell 9% to $5m, as Voisey’s Bay deliveries slid.
• Voisey’s Bay deliveries guided at 12-16 deliveries of cobalt, with two reported over the period averaging $16/lb.

Fura Gems (FURA CN) C$0.145, Mkt cap C$40m – Ruby at Montepuez in Mozambique blocked by workers

• The BBC report disruption at Fura Gem’s ruby mine at Montepuez in Mozambique.
• The entrance to the gem washing facilities has been blocked causing work to stop.
• The workers claim their employer, a local firm called Reef owes them >$265,000 (£215,000) in unpaid wages.
• Management at Reef, a local logistics firm, claim they have tried to negotiate the debt with Fura Gems but to no avail.
• Previous visits have indicated that workers in the ruby mines in Montepuez are particularly poorly paid.
  • Misinformation around cholera outbreaks incited riots and violent protests in Cabo Delgado and Nampula provinces, resulted in several fatalities in December (acaps.org).
  • This led to a series of violent demonstrations and targeted attacks against government and healthcare personnel, aggravating the crisis and undermining efforts to control the outbreak.
  • The resurgence of attacks coincided with the peak of the rainy season (November–April), a critical time for agricultural activities involving nearly the entire population of Cabo Delgado.
• Montepuez, is in Cabo Delgado is in the north of Mozambique. It is a difficult area at the best of times with some 61,000 children displaced.

Ionic Rare Earths (IXR AU) A$0.015, Mkt Cap A$67m – A$5.5 equity raise

• The Company is raising A$5.5m in new equity for its portfolio of upstream and recycling rare earths assets.
• The raise includes an issuance of 423m new shares at A$0.013 per share, a 28% discount to previous close.
• Investors will get three for four options with an exercise price of A$0.02 and maturing in four years.
• Executive Chairman, Brett Lynch, is subscribing for A$0.5m worth of shares following a recent investment of A$1.5m on joining the Company in January.
• Proceeds will be directed to magnet recycling business including the demonstration plant in Belfast along with the completion of a FS for a full scale plant due mid 2024.
• Additionally, the Company will advance offtake and funding discussions for the Makuutu Ionic Adsorption Rare Earths Project in Uganda.

Mineral Resources (MIN AU) A$69, Mkt Cap A$14.5bn – Q3 Update as cost reductions initiated at lithium operations

• West Australian diversified operator MinRes provides a Q3 update for the period to 31^st March 2024.
• The Company maintains FY24 volume and cost guidance for all its operations.
• Iron ore shipments at 4.5mt for the period, achieving 79% of the Platts 62% at US$98/t.
• Lithium pricing achieved for the quarter at US$1,030/t for SC6 equivalent.
• Wodgina produced 49kt SC, with the Company guiding production volumes lower and costs higher end of the range for the FY24.
• Wodgina FOB costs reported at $640/t on an SC6 equivalent basis.
• Bald Hill production of 30kt SC, with management focusing on reducing costs. Product sold at US$878/t on a 5.1% basis.
• Mt Marion saw ore mined fall 20% qoq to 993kt, producing 91kt and shipping 52kt SC6 equivalent. Price achieved at US$718/t on a 4.2% SC basis.
• FOB ytd at Mt Marion reported at $494/t SC6 equivalent.
• The decline in production at Mt Marion a result of cost-reduction measures.

Thor Energy (THR LN) 1.2p, Mkt Cap £3.1m – Completion of IVR Stage 1 earn-in on the Molyhil project, Northern Territory

• Thor Energy reports that ASX-listed, Investigator Resources (IVR AU) has completed the first stage of its 3-stage earn-in to Thor’s Molyhil tungsten/molybdenum project which is located around 220km NE of Alice Springs.
• Investigator Resources’ wholly owned subsidiary, Fram, has now spent A$1m on exploration including drilling and geophysical work entitling it to a 25% interest in the project.
• Investigator Resource will “issue Thor A$250,000 worth of IVR shares” and form a joint-venture (THR 75%:IVR25%) to progress the project further.  The joint-venture will include Thor’s 40% interest in the nearby Bonya tungsten/copper project located ~30km NE of Molyhil.
• Expenditure of an additional A$2m earns IVR a further 26% interest taking it to 51% with a further A$5m of exploration “on or before the sixth anniversary of the JV Commencement Date” taking Investigator Resources’ interest to 80%.
• Currently the project hosts an inferred resource of 4.4mt at an average grade of 0.27% tungsten trioxide, 0.1% molybdenum and 0.05% copper.
• Commenting on the completion of the first stage of the earn-in, Managing Director, Nicole Galloway Warland, said that the “Molyhil/Bonya Earn-in and the JV allow Thor to retain an equity interest in the prospective Molyhil tenements with reduced operational risk … [while allowing Thor Energy to] … focus on its priority US uranium assets”.

Conclusion: The third party earn-in helps advance the Molyhil project while Thor Energy presses ahead with its uranium projects in the US.  We await the results of Investigator Resources’ drilling at Molyhil with interest.

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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