Windfall gains for copper concentrate and copper cathode producers from price rally
MiFID II exempt information – see disclaimer below
Ariana Resources (AAU LN) – Proposed £1.15m fundraising for Dokwe feasibility studies
BeMetals* (BMET CN) – Drilling resumes at Pangeni, Zambia
Cora Gold (CORA LN) –£1.5m equity raise
Kenmare Resources (KMR LN) – Financial results as ilmenite prices stabilise following weak 2024
Keras Resources* (KRS LN) – New managing director appointed for organic phosphate mine and process plant in Utah, USA
Landore Resources (LND LN) – Expansion of claims at the BAM gold project, Ontario
Mkango Resources* (MKA LN) – Pulawy Rare Earth Separation Project granted “strategic” status under the EU CRMA
Paladin (PDN AU) – Langer Heinrich uranium mine hit by Namibian rainfall
Savannah Resources* (SAV LN) – Barroso granted “strategic” status under the EU CRMA
Sovereign Metals* (SVML LN) – Placing raises A$40m at A$0.85/s
Zanaga Iron Ore (ZIOC LN) – Upsizing of private placement to accelerate pre-construction progression
Zinnwald Lithium (ZNWD LN), European Metals (EMH LN) – Neighbouring lithium projects, different designations
Copper – Windfall gains for copper concentrate and copper cathode producers from dramatic uplift in physical and 3-month copper prices
- Copper concentrate producers will see substantial cash gains from December shipments of copper concentrates.
- Smelters or traders generally pay ~90% at the point of loading according to the prevailing 3-month copper price.
- The shipment is then repriced after 1, 2, 3 or even 4 months depending on the contract so the smelter does not take so much risk on changing / falling copper prices.
- Intense competition for concentrates has led to negative Tc/Rcs for smelters making the avoidance of price risk even more important for smelters with ultra-thin margins.
- Physical market: Trump tariffs and threats of further tariffs have led substantial inflow of copper into the US ahead of potential 25% tariffs on imports.
- Physical premiums have risen to an extraordinary $1,700/t with $2,000/t looking increasingly likely with 100,000-150,000t of physical copper estimated to be enroute to the US.
- We do not think many copper concentrate producers will receive these premiums but the physical price has dragged 3-month contract prices higher.
- Copper cathode producers will be diverting shipments into the US to take advantage of premium prices where possible.
- Windfalls: we estimate a 10,000t Q4 shipment of copper concentrates should see an approximate $7m dollar uplift based on the 3-month price.
- A 10,000t shipment of physical LME-grade copper cathode produced in February and sold into the US on a 1-month provisional price could see an approximate $20m uplift.
Conclusion: These windfall gains will be exceptional and will lift Q4 ’24 and Q1 ‘25 results for copper concentrate producers. The uplift should also be seen in the Q1 results for copper cathode producers.
The biggest winners will be the physical traders who are able to land physical copper into the US ahead of any new copper import tariffs.
Copper producers inline for windfall gains are: Freeport, BHP, Rio Tinto, Glencore, Antofagasta, Anglo American, First Quantum Minerals, Ivanhoe Mines, Atalaya Mining, CAML, Moxico* (Private)
*The analyst holds shares in Moxico Resources.
Copper (3-Month price: 9,934/t) – physical copper prices continue to diverge across the Atlantic amid Trump tariff disruption
- The spread between LME and COMEX copper prices continues to widen, sitting at c.$1700/t this morning.
- Trump administration guided to 25% tariffs on copper though any easing of this this may cool the COMEX rally with physical premiums more reflective of tariff expectations than the market’s view on demand.
- Bloomberg reports new US tariffs on copper imports could be coming ‘within several weeks.’
- Trump’s Section 232 investigation into the copper market was expected to take 270 days, so the earlier deadline may be adding further fuel to the cross-Atlantic divergence.
- Traders are front running tariff expectations and taking advantage of the cross-Atlantic arbitrage.
- Trading house Mercuria estimates 500kt of copper is flowing to the US vs historical monthly imports of 70kt.
- COMEX speculative positioning sits well below the levels seen during the speculative fervour of May 2024.
- Glencore halted its Chilean smelter Altonorte (350ktpa refined capacity) on issues affecting the furnace yesterday. (Bloomberg)
- Looking at physical demand, we note the Yangshan premium, which indicates Chinese import demand levels, has risen to 12 month highs.
- Shanghai futures have flipped into slight backwardation, although is too small to suggest a major supply squeeze currently.
- Whilst copper demand is improving, the well anchored LME price likely explains the muted response from pure-play copper miner
- Freeport are likely the primary beneficiary of this price divergence, given their domestic smelting capacity, alongside others including Rio Tinto with their Kennecott smelter.
- The US consumed 1.6mt of refined copper in 2024 and produced 1.1mt of mined supply, smelting 850kt of supply. (USGS)
- Meanwhile, China mined 1.8mt copper in 2024 and smelted 12mt of supply.
- China continues to drive copper demand, with 50% of the demand market, and in the medium-term LME and Shanghai prices will continue to reflect their appetite.
- China’s property market continues to struggle, with the housing market remaining oversupplied following decades of expansion.
- However, energy transition copper demand is expected to increase by >110% between 2025 and 2035, powered by EV and renewable grid demand.
- On the supply side, Teck expects concentrate supply to peak in 2028, with seaborne set to slide on the continued ramp up of smelter capacity in China, Indonesia, India and the DRC.
- TCRCs are sitting at historic lows, expected to reduce smelter profitability, and reduce utilisation rates.
- Consensus currently expects the copper cathode market to flip into deficit in 2027.
EU trade chief meets with US officials to discuss US tariffs
- The European Union’s trade commissioner Maros Sefcovic has met with US President Donald Trump’s top trade officials in an attempt to avoid the 25% US tariffs set to be imposed on a wide range of EU goods.
- Sefcovic is said to have held “substantive talks” with Commerce Secretary Howard Lutnick, US Trade Representative Jamieson Greer and top White House economic adviser Kevin Hassett, but the outcome of the talks is still unclear.
- Some countries are preparing tariff concessions ahead of Trump’s 2nd April announcement of the reciprocal tariff plan, a day he has dubbed “Liberation Day” for the US economy.
- So far EU officials have so far been unsuccessful in talking Trump back from a trade war and is planning retaliatory tariffs on US products.
| Dow Jones Industrials | +0.01% | at | 42,588 | |
| Nikkei 225 | +0.65% | at | 38,027 | |
| HK Hang Seng | +0.60% | at | 23,483 | |
| Shanghai Composite | -0.04% | at | 3,369 | |
| US 10 Year Yield (bp change) | +1.0 | at | 4.32 |
Economics
Zambia – A Chinese national was killed with another critically injured in a shooting in Chambishi last Thursday
- We might not normally comment on such an incident, but we sense there may be tension in local communities along the Copperbelt around Chinese mining ventures.
- Many informal and unregistered Chinese miners have already been expelled from Zambia as the authorities clean up the industry and stamp out corruption.
- A recent spill of ~50m litres of toxic mine waste from a Chinese Chambishi copper mine has led to the killing of a river which feeds into the Kafue river with impact seen >100km downstream from the mine according to one report.
- The dam was owned by Sion-Metals Leach and spilled concentrated acid with heavy metals and dissolved solids from their mining operation.
- We are not saying the shooting and the toxic mine spill are connected but if we were Chinese we wouldn’t want to go for a walk anywhere near the Kafue river for numerous reasons.
*The analyst recently toured the Copperbelt visiting mines and prospects in the region.
Currencies
US$1.0798/eur vs 1.0783/eur previous. Yen 150.08/$ vs 150.62/$. SAr 18.247/$ vs 18.272/$. $1.291/gbp vs $1.291/gbp. 0.633/aud vs 0.628/aud. CNY 7.264/$ vs 7.263/$
Dollar Index 104.232 vs 104.460 previous
Precious metals:
Gold US$3,020/oz vs US$3,017/oz previous
Gold ETFs 87.8moz vs 87.8moz previous
Platinum US$977/oz vs US$979/oz previous
Palladium US$956/oz vs US$957/oz previous
Silver US$33.7/oz vs US$33.2/oz previous
Rhodium US$5,675/oz vs US$5,575/oz previous
Base metals:
Copper US$9,935/t vs US$10,006/t previous
Aluminium US$2,611/t vs US$2,614/t previous
Nickel US$16,165/t vs US$15,975/t previous
Zinc US$2,951/t vs US$2,969/t previous
Lead US$2,087/t vs US$2,051/t previous
Tin US$35,015/t vs US$34,500/t previous
Energy:
Oil US$73.4/bbl vs US$73.3/bbl previous
Henry Hub Gas US$3.87/mmBtu vs US$3.96/mmBtu yesterday
- Crude oil prices were stable after the API estimated a larger-than-expected 4.6mb/d w/w draw to US crude inventories (-2.5mb/d exp) as Russia and Ukraine agreed to implement a partial truce in the Black Sea.
- European energy prices fell on positive sentiment regarding the progress of ceasefire talks, with France’s nuclear generation flat w/w at 75% of the country’s 61.4GW maximum capacity.
- Masdar has agreed to pay €184m to Endesa to acquire a 49.99% stake in four solar plants in Spain, with a total capacity of 446MW, which follows last year’s partnership in 2GW of solar assets between the parties.
- Vattenfall has taken a final investment decision on the 1.6GW Nordlicht 1 and 2 offshore wind farms in the German North Sea, which will begin construction in 2026 and are expected to be operational in 2028.
- Trafigura confirmed that the decision was taken not to proceed further following an A$5m feasibility study in 2023 into an A$750m green hydrogen plant at its Port Pirie lead smelter in South Australia.
Natural Gas €41.0/MWh vs €41.6/MWh previous
Uranium Futures $64.3/lb vs $64.4/lb previous
Bulk:
Iron Ore 62% Fe Spot (China CFR) US$102.3/t vs US$101.7/t
Chinese steel rebar 25mm US$477.7/t vs US$478.2/t
HCC FOB Australia US$174.0/t vs US$173.5/t
Thermal coal swap Australia FOB US$100.8/t vs US$100.8/t
Other:
Cobalt LME 3m US$33,610/t vs US$33,610/t
NdPr Rare Earth Oxide (China) US$60,913/t vs US$61,130/t
Lithium carbonate 99% (China) US$9,843/t vs US$9,844/t
China Spodumene Li2O 6%min CIF US$805/t vs US$805/t
Ferro-Manganese European Mn78% min US$1,005/t vs US$1,005/t
China Tungsten APT 88.5% FOB US$358/mtu vs US$358/mtu
China Graphite Flake -194 FOB US$435/t vs US$435/t
Europe Vanadium Pentoxide 98% US$5.0/lb vs US$5.0/lb
Europe Ferro-Vanadium 80% US$24.3/kg vs US$24.3/kg
China Ilmenite Concentrate TiO2 US$299/t vs US$299/t
Global Rutile Spot Concentrate 95% TiO2 US$1,506/t vs US$1,506/t
Spot CO2 Emissions EUA Price US$65.1/t vs US$65.1/t
Brazil Potash CFR Granular Spot US$335.0/t vs US$335.0/t
Germanium China 99.99% US$2,825.0/kg vs US$2,825.0/kg
China Gallium 99.99% US$390.0/kg vs US$390.0/kg
Battery News
BYD to target 5.5m vehicle sales in 2025
- BYD Chairman Wang Chuanfu announced has announced that the company would target sales of 5.5m vehicles, with more than 800,000 in overseas markets.
- The automaker sold 4.27m in 2024, so the new sales target would represent a ~29% growth yoy.
- The overseas sales target of 800,000 would be a 92% yoy growth.
- BYD is expected to launch almost 20 new models across its four brands in 2025.
- It is also expected that the companies 1,000kW EV chargers will be available to use from next month.
- The automaker has begun installation of 4,000 1MW charging station and the first batch of 500 is expected to be operational by April.
- In case you missed it in our previous comment, BYD’s 1MW charging station can supposedly add 2km of range in one second and 400km in five minutes.
Nio signs deal with state-owned firm to build more swap stations
- Nio is continuing to expand its battery swap network and has partnered with state-owned Future Science City Group to build 100 new swap stations in Beijing.
- The news comes just a week after the company announced a partnership with CATL to build the world’s largest battery swap network.
CATL Hong Kong listing gets approval from Chinese securities regulator
- CATL received approval from the Chinese mainland securities regulator to move forward with its planned listing on the main board of the Hong Kong Stock Exchange.
- The Hong Kong listing will raise at least $5.0bn and will be the city’s biggest in four years.
Company News
| Overnight Change | Weekly Change | Overnight Change | Weekly Change | ||
| BHP | 1.2% | -0.1% | Freeport-McMoRan | 3.4% | 8.0% |
| Rio Tinto | 1.0% | 1.1% | Vale | 1.5% | -0.9% |
| Glencore | 0.6% | -2.8% | Newmont Mining | 1.6% | -0.5% |
| Anglo American | -0.3% | 0.9% | Fortescue | 0.7% | -1.7% |
| Antofagasta | -1.1% | -1.7% | Teck Resources | 1.7% | 1.0% |
Ariana Resources (AAU LN) 1.45p, Mkt Cap £33m – Proposed £1.15m fundraising for Dokwe feasibility studies
- Ariana Resources has announced conditional plans to raise a total of £1.15m at a price of 1.5p/share.
- The conditional placing of 46m additional shares raises ~£0.70m while a subscription for a further ~30m share aims to raise £0.45m.
- “As part of the Subscription, the Company will also issue approximately 19,000,000 Ordinary Shares as payment of amounts owed to certain to consultants of the company in respect of various services”.
- “All Directors of the Company have indicated their intention to participate in the Subscription, by subscribing for Subscription Shares”.
- The company confirms that the new shares, including “Broker Shares, will represent approximately 3.9 per cent. of the Enlarged Issued Share Capital”.
- The funds will help “to complete certain desktop and field work to support the ongoing feasibility study at the Dokwe Project” in Zimbabwe and ensure sufficient financial resources “for its immediate project exploration and development needs until July 2025”.
- Earlier this month, Ariana Resources issued an updated mineral resource estimate for Dokwe which now hosts ~1.4moz of gold at a cut-off grade of 0.3g/t.
- Pre-feasibility work released by the company in May 2024, and based on an earlier resource estimate, described an investment requiring peak funding of US$82m at Dokwe enabling the production of an average of 60,000oz of gold annually at an all-in sustaining cost of US$1,144/oz by processing 1.5mtpa of ore over a 13 year mine life to generate an after tax NPV10% of US$160m and an IRR of 41% at a gold price of US$2,000/oz.
Conclusion: Additional funding, which is being supported by the directors, will help progress the feasibility study for the Dokwe project in Zimbabwe.
BeMetals* (BMET CN) – C$0.05, Mkt cap C$11.4m – Drilling resumes at Pangeni, Zambia
- Yesterday, BeMetals announced the resumption of drilling at its Pangeni project in western Zambia.
- The latest phase of drilling is expected to comprise 2-2,500m of coring aimed at identifying additional zones of copper mineralisation and further expanding the mineralised footprint of the “D-Prospect area”.
- The project is located on the western end of Zambia’s copper belt with BeMetals’ exploration programme identifying previously undetected copper mineralisation “beneath a thin Kalahari sand cover”.
- The company explains that the “overall footprint scale of the D-Prospect copper mineralization and its target zones are now comparable to that of the Lumwana Copper Mine’s Chimiwungo Deposit” and that “the D-Prospect’s Nkala Zone also bears many of the geological hallmarks of the Lumwana Mine’s deposits in terms of mineralization style, alteration, structure and host rocks”.
- CEO, John Wilton, said that “our discovery of extensive copper mineralization and the positive results from the 2024 drilling campaign have reinforced the team’s confidence in the Project’s potential to further evolve into a Tier 1 scale discovery”.
- He explained that “the first new discovery of significant copper mineralization along the Zambian Copperbelt in decades … [is] … a testament to the previously untapped potential in this region”.
- In January, the company announced that it had extended the known extent of mineralisation at Pangeni to over approximately 3km having previously announced. in October 2024, that drilling had extended the known mineralised footprint. This announcement confirms the company’s optimism that it may be able to replicate its previous success.
Conclusion: BeMetals’ resumption of drilling at Pangeni in western Zambia aims to further extend the mineralised footprint which is now reported to be similar in scale to that of the Chimiwungo Deposit at Barrick’s Lumwana mine located around 200km northeast of Pangeni. We await the results with interest.
*An SP Angel analyst holds shares in BE Metals
Cora Gold (CORA LN) 5.6p, Mkt Cap £25m –£1.5m equity raise
- The Company is raising £1.5m in new equity as the team drives the Sanankoro Gold Project, Mali, closer to FID.
- The raise is done at 4.75p implying a ~19% to the previous closing market price.
- Each new share will have a warrant attached to subscribe for one new share at 7p for a period of 24 months.
- Proceeds will be used to update the 2022 DFS as well as continued exploration.
- Updated DFS is expected to be completed later in 2025
Kenmare Resources (KMR LN) 432p, Mkt Cap £385m– Financial results as ilmenite prices stabilise following weak 2024
- Mozambique mineral sands producer Kenmare report EBITDA of $157m over 2024 ($220m 2023) on $415m in revenue ($458m in 2023).
- Pricing fell 29%yoy, and Kenmare notes ‘ilmenite prices are lower than in 2H24…[but] they look to be stabilising.’
- Average ilmenite price of $360/t vs 2023 of $418/t.
- Cash operating costs less co-products at $143/t vs $106/t in 2023, whilst cash operating costs up 7% on increased labour costs and increased power costs.
- Net debt sitting at $25m vs net cash of $21m in 2023 on continued CAPEX programme.
- CAPEX over the year of $154m, including $102m in development CAPEX and $37m
- Company guiding for 930-1,050kt ilmenite over 2025, with 2 WCP A upgrade due for commissioning 3Q25.
Keras Resources* (KRS LN) – 1.6p, Mkt cap £1.5m – New managing director appointed for organic phosphate mine and process plant in Utah, USA
(Keras holds 100% of the Diamond Creek phosphate mine in Utah, USA)
- Keras Resources report the appointment of Colton Hale as managing director of the Diamond Creek mine and Falcon Isle process plant in Utah, USA.
- Colton Hale has hands-on experience in mining with Rio Tinto, Burningham Enterprises and Bodell Construction.
- He formerly worked as a Senior Financial Analyst at Rio Tinto and as a Project Superintendent at Bodell Construction.
- Colton formerly worked on the construction of the access roads and the maiden mining campaign at Diamond Creek during his time with Burningham Enterprises.
- Keras report the operation at the Delta Facility is going well and is producing both Phosul® granulate and Falcon Isle dry rock phosphate product, sold under the PhosAgri Organic banner.
- The PhosAgri Organic product grades between 11%-15% available P2O5 which is 3x higher than any other organic phosphate produced in the US.
- The product is certified organic by the three key agencies namely;
- CDFA – California Department of Food & Agriculture
- OMRI – Organic Materials Review Institute
- WSDA – Washington State Department of Agriculture
- Keras sold 5,297t of PhosAgri Organic last year vs 4,606t in 2023.
- Phosul® won the 2024 Green Chemistry Challenge Award for phosphate fertilizer that avoids hazardous chemicals and waste emissions associated with traditional phosphate fertilizer.
- Traditional production processes involve emissions such as strong acids, heavy metals, and radioactive materials.
- Phosul® jv sales started to ramp up from January to meet new demand for the Spring planting season.
- The jv reports a “significant increase in demand in the first quarter of 2025 and we expect this to continue through the year.”
Conclusion: It sounds as if Phosul® sales are off to a good start and that PhosAgri Organic product sales should underpin sales as Phosul® sales gather momentum.
*SP Angel acts as nomad and broker to Keras
Landore Resources (LND LN) 3.1p, Mkt Cap £10m – Expansion of claims at the BAM gold project, Ontario
- Landore Resources reports that it has acquired additional mineral claims adjacent to its BAM gold project in Ontario via its purchase of “a subsidiary of Halyard Consulting … for … 13,000,000 new … shares” or around 3.9% of the enlarged company.
- The company explains that the newly acquired claims “extend over 15 kilometres east of Landore’s flagship Junior Lake property, which comprises the BAM Gold Deposit, B4-7 Nickel-Copper-Cobalt-PGE Deposit, and numerous other precious and base metal prospects”.
- The enlarged area “now extends over 45 kilometres of ground, which is highly prospective for gold and other minerals”.
- Describing the additional mineral claims as “important additional strategic rights … [CEO, Alexander Shaw said that they bring] … substantial future exploration upside potential as we seek to move BAM towards the Pre-Feasibility stage” which the company has previously indicated it expects to deliver in 2026.
- The company’s website shows an ‘Indicated & Inferred’ resource for the BAM deposit totalling approximately 49mt (at a 0.3g/t cut-off) at an average grade of 1g/t gold hosting ~1.5moz of gold. Around 31mt of the resource is currently designated ‘Indicated’ containing ~1moz.
- Earlier this month, Landore Resources announced the start of a 3,500m drilling programme at the BAM Gold Deposit and the Junior Lake property.
Conclusion: Expansion of the land area available for exploration at the BAM project offers more opportunities to expand the existing 1.5moz resource. We look forward to results from the current drilling and to the planned PFS in 2026.
Mkango Resources* (MKA LN) 13p, Mkt Cap £43m – Pulawy Rare Earth Separation Project granted “strategic” status under the EU CRMA
BUY
- The European Commission named the Pulawy Rare Earth Separation Facility in Poland as one of the first 47 projects providing it with a ‘strategic’ status under the Critical Raw Materials Act.
- The Company highlights that the status offers a series benefits including:
- Permitting processes will be accelerated and simplified in accordance with time limits set out within the CRMA.
- The Pulawy Project will benefit from coordinated support from the Commission, Member States and financial institutions, in particular in terms of access to finance and in supporting project promoters by facilitating connections with potential offtakers.
- Full list of selected projects can be found here
- https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials/strategic-projects-under-crma/selected-projects_en
- Given its a processing/refining facility, the Pulawy Project permitting should not exceed 15 months.
- The facility is planed to run at 2ktpa NdPr oxides and 50tpa DyTb oxides.
- Mkango signed a land lease agreement with Grupa Azoty Pulawy, a major chemicals producer, for the construction of a strategic REE separation facility next to an industrial complex.
Conclusion: The designation should facilitate and accelerate development of Pulawy with the facility directly addressing latest CRMA targets for EU processing. Under the CRMA, at least 40% of EU’s annual consumption of critical materials should be processed domestically. Currently, more than 95% of RE processing is done in Asia and close to 90% in China.
*SP Angel acts as nomad and broker to Mkango Resources
Paladin (PDN AU) A$5.7, Mkt Cap A$2.2bn – Langer Heinrich uranium mine hit by Namibian rainfall
- Namibian uranium miner Paladin report an update from their Langer Heinrich uranium mine.
- The Company notes that the mine has experienced a ‘one-in-fifty-year rainfall event’, impacting transport, crushing of saturated ore and excess surface water.
- Company notes no significant damage to the processing plant, with processing due to return as the ‘in-circuit inventory and chemistry stabilizes and stockpiled ore saturation levels decrease.’
- Paladin withdraws the FY2025 production guidance and does not expect to achieve run-rate guidance of 6mlb by the end of CY2025.
Savannah Resources* (SAV LN) 4.6p Mkt Cap £100m – Barroso granted “strategic” status under the EU CRMA
BUY – 18.1p
- The European Commission named the Barroso Lithium Project in Portugal as one of the first 47 projects providing it with a ‘strategic’ status under the Critical Raw Materials Act.
- The Company highlights that the status offers a series benefits including:
- Selected projects “will be able to benefit from coordinated support by the Commission, Member States and financial institutions to become operational, notably regarding access to finance and support to connect with relevant off-takers”.
- Additionally, “they will also benefit from streamlined permitting provisions, to ensure predictability for project promoters while safeguarding environmental, social and governance standards… In line with the CRMA, the permit-granting process will not exceed 27 months for extraction projects and 15 months for other projects”.
- Full list of selected projects can be found here
- https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials/strategic-projects-under-crma/selected-projects_en
- The Company is now planning to engage with the EC on potential opportunities to assist with project development.
- The Company expects to make the RECAP (environmental permitting) submission and complete the DFS by the end of 2025.
- Start of construction expected to follow in 2026 for maiden spodumene concentrate in 2027.
- Full list of selected projects can be found here
Conclusion: Securing “strategic” status from the EC under the EU CRMA is a welcome news and another validation of the project importance to development of domestic sources of critical materials. The designation should assist the team with potential funding discussions as the Company is finalising FS and progressing towards FID.
*SP Angel acts as Nomad and Broker to Savannah Resources
Sovereign Metals* (SVML LN) 40.7p, Mkt Cap £252m – Placing raises A$40m at A$0.85/s
(Sovereign currently holds 100% of the Kasiya project. Malawi has 10% free carry right. Rio Tinto holds 19.9% of Sovereign Metals)
- Sovereign Metals reports it has received firm commitments for a placement of 47,058,824 new shares at A$0.85/s raising A$40m before costs.
- The placing is supported by new and existing shareholders including a number of large global institutional investors.
- The placing price represents a 12.8% discount to the previous close of A$0.975 and an 8.1% discount to the 15-day volume weighted average price.
Conclusion: Buy on the dip due to quality of the Kasiya rutile and graphite project and potential for Rio Tinto to look to consolidate its position.
*SP Angel act as Nomad and broker to Sovereign Metals. An SP Angel analyst has visited the Kasiya mine site. We highly recommend the Malawi coffee beans sold in Lilongwe airport
Zanaga Iron Ore (ZIOC LN) 7.8p, Mkt Cap £53m – Upsizing of private placement to accelerate pre-construction progression
- RoC high-grade iron ore developer Zanaga has received additional subscriptions from Greymont Bay and Gagan Gupta of US$1.2m and $0.3m respectively.
- As a result, Greymont will provide US$12m and Gagan Gupta will provide US$4.3m to the fundraise.
- As a result of the upsized placement, Zanaga will be able to accelerate some of its planned metallurgical testwork programmes, alongside advancing the pre-construction engineering objectives.
- Zanaga received the first tranche of the fundraise for US$17m on 13th March 2025.
- Zanaga Iron Ore recently reported the potential to increase the value of the current Zanaga iron ore project NPV >US$4bn.
- Premium products: the potential for DRI sales could add US$6bn to the Zanaga NPV.
- DRI sales are achieving significant premiums due to strong demand for greener and cleaner EA furnaces.
- Management are to run lab-scale test work ahead of likely pilot scale testing on a bulk haematite sample.
- Stage 1 throughput – 12mpta operation.
- Product 66% Fe
- CAPEX – $1.9bn,
- OPEX FOB – US$31.5/dmt LoM
- OPEX CFR – US$59.4/dmt
- NPV – $3.68bn
- IRR – 26%.
- Stage 2 throughput – 30mtpa
- Product 68.5% Fe
- CAPEX – $1.87bn
- OPEX FOB – $25/dmt
- OPEX CFR – $53.2/dmt
- NPV – $7.4bn,
- IRR – 28.2%.
- Costs: Both Stage 1 and Stage 2 sit at the bottom end of the cost curve according to company estimates.
Conclusion: Additional funding from Zanaga’s primary new backers reflects their confidence in the Project’s potential, alongside the positive long-term fundamentals of the high-grade iron ore market.
Zinnwald Lithium (ZNWD LN) 4.5p, Mkt Cap £22m – Neighbouring lithium projects, different designations
European Metals (EMH LN) 14p, Mkt Cap £29m
- The European Commission yesterday released a list of 47 projects that were designated “strategic” under the EU Critical Raw Materials Act (CRMA).
- Cinovec Lithium Project developed by Geomet (a 49/51 JV between European Metals/CEZ) was included in the list while application for Zinnwald Lithium Project developed by same name Company was unsuccessful.
- Two companies are seen developing same orebody separated by the Czech/German border.
- Cinovec is located on the Czech Republic side hosting 7.4mt LCE at 0.4% Li2O.
- Zinnwald is developing the resource in Germany with the latest estimate for 2.7mt LCE at 0.5% Li2O.
- Apart from the scale difference, Cinovec appears to be more advanced with FS targeted for completion mid-2025 and EIA to be completed and submitted for approval by the end of 2025.
- Cinovec is also backed by CEZ, a leading energy group in Western/Central Europe with the Czech government holding a 70% stake.
- Zinnwald Lithium, a 100% owner of the project, is currently working on a PFS for expanded production option that is expected to be released 1Q25.
- European Metals closed 50% up on Wednesday.
- Zinnwald Lithium was down 25%.
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
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.
| Sources of commodity prices | |
| Gold, Platinum, Palladium, Silver | BGNL (Bloomberg Generic Composite rate, London) |
| Gold ETFs, Steel | Bloomberg |
| Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt | LME |
| Oil Brent | ICE |
| Natural Gas, Uranium, Iron Ore | NYMEX |
| Thermal Coal | Bloomberg OTC Composite |
| Coking Coal | SSY |
| RRE | Steelhome |
| Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite, Rutile | Asian Metal |
DISCLAIMER
This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.
This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.
This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.
This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.
Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.
Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.
SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).
SPA is registered in England and Wales with company number OC317049. The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP. SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.
MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.
A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).
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
