SP Angel Morning View -Today’s Market View, Wednesday 28th June 2023

Copper weakens as China industrial data disappoints again

MiFID II exempt information – see disclaimer below

Beowulf Mining* – Appointment of Ed Bowie as CEO

Bluejay Mining* (JAY LN) – Bluejay Mining raise £1.3m for resource definition on the new E-lode discovery at Hammaslahti in Finland

Cora Gold (CORA LN) – $70m debt mandate agreed with Atlantique Finance

Golden Metal Resources (GMET LN) – Non-binding LOI to supply tungsten concentrate from Pilot Mountain

Goldstone Resources* (GRL LN) – Temporary trading suspension

Ormonde Mining* (ORM LN) – Final Results for year to 2022 & Update

KEFI Gold and Copper* (KEFI LN)– Positive Hawiah economic studies

Rainbow Rare Earths (RBW LN) – Rainbow signs agreement for 85% of the Phalaborwa project in South Africa

Economics

Copper weakens as China industrial data disappoints again and supply remains buoyant

• Copper prices fell to $8,364/t overnight, touching $8,322/t.
• The move followed a data release from China which showed industrial firms’ profits fell c.19% yoy to May.
• Copper traders are eyeing limited demand going forward, despite global copper inventories in warehouses sitting near 15-year lows.
• Copper TC/RC charges in China are sitting at a four year high as of mid-June, suggesting there is plenty of concentrate available in mainland China.
• Peru has announced it will look to expand its military presence on the ‘mining corridor,’ to limit further blockades disrupting copper supply.
• Konkola stated yesterday it plans to shut down its Nchanga smelter for the next 21 days for maintenance.

Gold – $1,910/oz – Price continues to slide as positive US data supports bets on further rate hikes

• Gold prices fell below $1,910/oz this morning in the spot market, after the probability of a July rate hike increased again.
• The market now expects a 77% chance of a 25bp hike in July.
• This increased confidence followed a jump in new home sales of 12.2%% and consumer confidence climbing to a 17-month high.
• US Two-Year yields are holding near three month highs, encouraging a sell-off in physical gold from ETFs.
• ETFs have now slashed gold holdings for the past seven trading days, with net sales on the year climbing to 885koz.

Iron ore climbs in China despite weak data as stimulus hopes linger

• Dalian iron ore jumped 2.5% overnight, whilst Singapore futures sit at $113.5/t.
• Chinese industrial profits are contracting, but sentiment has been supported by Premier Li Qiang’s comments yesterday on Beijing’s commitment to growth.
• 20 cities are reportedly easing restrictions on house buying, Reuters reports according to local media sites.
• Coking coal up 0.85% and coke up 1%.
• Steel products are also gaining this morning.
• However, steel inventories at mills are rising and transactions in the spot market for steel products are disappointing.

China – Renminbi continues to fall to 7.246 vs the US dollar.

• The fall reflects poor demand for Chinese exports alongside slowing domestic economic growth

Germany – Gfk consumer sentiment falls to -25.4 from -24.4, significantly below expectations

• Economic expectations also fell to 3.7 from 12.3
• Income expectations fell to -10.6 from -8.2
• Propensity to buy rose to -14.6 from -16.1 though these are still poor ratings

Currencies

US$1.0949/eur vs 1.0939/eur yesterday. Yen 144.10/$ vs 143.49/$. SAr 18.590/$ vs 18.509/$. $1.273/gbp vs $1.275/gbp. 0.665/aud vs 0.672/aud. CNY 7.235/$ vs 7.213/$

Dollar Index 102.59 vs 102.50 yesterday.

Commodity News

Precious metals:

Gold US$1,910/oz vs US$1,928/oz yesterday

Gold ETFs 92.9moz vs 92.9moz yesterday

Platinum US$923/oz vs US$938/oz yesterday

Palladium US$1,277/oz vs US$1,325/oz yesterday

Silver US$22.78/oz vs US$23.04/oz yesterday

Rhodium US$5,100/oz vs US$5,300/oz yesterday

Base metals:

Copper US$ 8,363/t vs US$8,459/t yesterday

Aluminium US$ 2,204/t vsUS$2,170/t yesterday

Nickel US$ 20,580/t vs US$20,650/t yesterday

Zinc US$ 2,379/t vs US$2,370/t yesterday

Lead US$ 2,091/t vs US$2,094/t yesterday

Tin US$ 26,315/t vs US$25,875/t yesterday

Energy:

Oil US$72.5/bbl vs US$74.7/bbl yesterday

• Crude oil prices moved lower yesterday on comments from the president of the ECB that it probably won’t be able to declare the end of its historic interest-rate hiking cycle any time soon.
• European energy prices edged higher as French nuclear reactor operating levels were reported as increasing w/w from 61% to 59% of capacity from 33 available reactors (from 34) out of 56 units.

Natural Gas US$2.790/mmbtu vs US$2.761/mmbtu yesterday

Uranium UXC US$56.50/lb vs US$56.50/lb last week

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$112.6/t vs US$109.9/t

Chinese steel rebar 25mm US$523.3/t vs US$520.8/t

Thermal coal (1st year forward cif ARA) US$118.0/t vs US$117.0/t

Thermal coal swap Australia FOB US$143.0/t vs US$139.0/t

Coking coal swap Australia FOB US$237.0/t vs US$237.0/t

Other:  

Cobalt LME 3m US$29,525/t vs US$29,525/t

NdPr Rare Earth Oxide (China) US$66,626/t vs US$67,236/t

Lithium carbonate 99% (China) US$41,814/t vs US$41,936/t

China Spodumene Li2O 6%min CIF US$4,090/t vs US$4,090/t

Ferro-Manganese European Mn78% min US$1,122/t vs US$1,143/t

China Tungsten APT 88.5% FOB US$315/mtu vs US$315/mtu

China Graphite Flake -194 FOB US$735/t vs US$735/t

Europe Vanadium Pentoxide 98% 7.4/lb vs US$7.4/lb

Europe Ferro-Vanadium 80% 31.75/kg vs US$31.75/kg

China Ilmenite Concentrate TiO2 US$302/t vs US$303/t

Spot CO2 Emissions EUA Price US$92.7/t vs US$93.4/t

Brazil Potash CFR Granular Spot US$310.0/t vs US$310.0/t

Battery News

Tesla to hit record quarter in China despite shrinking market share

• The US automaker is on track to sell 155,000 vehicles in China between April and June – a 13% increase on its record Q1 this year.
• Tesla’s share in China’s EV market is expected to shrink to 13.7% over Q2, from 16% in the first three months, due to the popularity of local manufacturers BYD and Aion among others.
• Official sales numbers from Tesla will be released over the weekend and China sales figures announced in the first week of July.

Tesla’s charging system on track to becoming North American standard

• Tesla’s North American Charging System (NACS) technology has been gathering momentum for a few weeks – Volvo the latest to join General Motors, Ford, and Rivian in embracing Tesla’s charging design.
• The move from automakers shuns earlier efforts by the Biden administration to make the Combined Charging System (CCS) the dominant charging standard in the United States.
• SAE International aims to make an industry standard configuration of Tesla’s charging connector in six months or less, an official at the standards organization said on Tuesday.
• The association is holding conversations with Tesla, Ford, GM, and other automakers as well as the federal government about NACS standardisation.

Company News

Beowulf Mining* (BEM LN) 1.8p, Mkt Cap £21m – Appointment of Ed Bowie as CEO

• Beowulf announces the appointment of Ed Bowie as new CEO to replace Kurt Budge.
• Ed graduated from Oxford University with an MA Honours Degree in Geology and subsequently from the Royal School of Mines with an MSc.
• In recent years, Ed has served as Chairman of the Board for Cora Gold and as Business Development Manager for Serabi Gold.
• Ed has worked in the sector for close to three decades, and has experience across mining and mineral projects, fund management, capital raising and M&A and financing solutions.
• Ed states that the company’s ‘three assets bring significant optionality to Beowulf with each having the potential to add significant value.’

*SP Angel acts as Nomad and Broker to Beowulf Mining

Bluejay Mining* (JAY LN) 1.81p, Mkt cap £19.2m – Bluejay Mining raise £1.3m for resource definition on the new E-lode discovery at Hammaslahti in Finland

• Bluejay Mining report the raising of £1.3m through the issue of 74.3m new shares at 1.75p/s.
• The funds will be used to follow up on promising drill results on the East Lode (E-lode) of the Hammaslahti copper, zinc, silver and gold project in Finland.
• Hammaslahti: Recent drilling at Hammaslahti show sulphide mineralisation in all drill holes with further work required for the development of a new mineral resource.
• The team plan to drill another 1,000m in August
• Funding discussions are ongoing with two potentially significant investors from the US and Nordic region.
• Phase one of the May-June drill program saw the identification of sulphide mineralisation in all seven drill holes. The drilling team have recovered some 1,935.7m of core.
• The historic Hammaslahti mine produced some 7mt of ore grading 1.16% Cu, 1.55% Zn, 0.59g/t gold and 5.2 g/t silver according to the Geological Survey of Finland from the VMS ‘volcanogenic massive sulphide’ style-deposit
• Kangerluarsuk: exploration at Kangerluarsuk is suspended due to unseasonal and unexpected sea-ice in the fjords leading to the project in Greenland.
• The presence of the sea-ice is said to present ‘significant operational and capital risk to the Company’ causing the drill program to be delayed.
• Dundas ilmenite project: Bluejay continue to work on the development of a new BFS for the Dundas titanium minerals sands project in Greenland

Conclusion:  BlueJay’s exploration plans are evolving to reflect the results coming through from recent drilling in Finland. The presence of significant sulphide mineralisation is leading the team to prioritise the Hammaslahti project while awaiting assay results from the recent drilling.

*SP Angel acts as nomad and broker to Bluejay Mining. The analyst has visited the historic Enonkoski mine site and holds shares in Bluejay Mining

Cora Gold (CORA LN) 3.6p, Mkt Cap £13m – $70m debt mandate agreed with Atlantique Finance

• The Company engaged Atlantique Finance to source a $70m senior debt funding for the Sanankoro Gold Project in south Mali.
• Atlantique Finance is the investment banking and advisory arm of Groupe Banque Atlantique and a member of the Banque Centrale Populaire Group (BCP Group), the 6th largest banking group in Africa in terms of equity and the leading banking institution in Morocco.
• The $70m debt mandate follows up on the news over a $3.9m equity raise completed earlier this year and $15.9m convertible loan notes issued to cover estimated $90m Sanankoro development capex.

Golden Metal Resources (GMET LN) 8.75p, Mkt Cap £7.4m – Non-binding LOI to supply tungsten concentrate from Pilot Mountain

(Power Metal Resources (POW LN) 0.73p, Mkt cap £15m holds 62% of Golden Metal Resources)

1. Golden Metal Resources reports that it has concluded a non-binding Letter of Intent (LOI) with the US based tungsten processor, Global Tungsten & Powders (GTP) outlining terms for a future off-take agreement to supply concentrate from a future mine at Pilot Mountain, Nevada.
2. GTP, which is based in Towanda, Pennsylvania could purchase between 50,000 and up to 70,000 metric tonne units (mtu) of concentrate containing 65% tungsten trioxide at a US$ price “based on a discount to the European APT (ammonium Paratungstate) quote provided by Fast Markets”.
3. APT is an intermediate product which is used in the industry as a benchmark for concentrate pricing with a discount applied to reflect the processor’s costs in converting the concentrate to APT.  An mtu is an industry measure equivalent to 10kg.
4. The Pilot Mountain project is currently “an advanced exploration and mineral resource definition stage project located in Mineral County in western Nevada” which has existing indicated mineral resources at of 9.01mt at an average grade of 0.26% tungsten trioxide (WO₃) plus an inferred resource of a further 3.53mt at an average grade of 0.31% WO₃ within the deposits at Desert Scheelite and Garnet.
5. In recent announcements, Golden Metal Resources has highlighted the resource expansion potential at Pilot Mountain where geophysical exploration has identified five “high-priority” exploration targets at the Desert Scheelite Parallel West, Porphyry Depths, Desert Scheelite East, Porphyry South, and Good Hope West targets.
6. The US Government is supporting initiatives to secure supply chains of minerals it regards as vital to the national interest. Tungsten is regarded as a ‘Critical’ or ‘Strategic’ mineral commodity in many jurisdictions and the US does not, we understand, have a current operating source of mined tungsten, although historically Nevada was a known producer.
7. In this context, Golden Metals Resources’ comment in today’s announcement today that “GTP and Golden Metal also intend to discuss and consider cooperation opportunities for the development of a Western World supply chain strategy which will align with recent policy announcements from the US Department of Defense and the US Defense Logistics Agency with regard to the building of strategic stockpiles of critical minerals, including tungsten products” aligns a potential future US source of tungsten supply with a US based processor.
8. CEO, Oliver Friesen, confirmed that in addition to setting out potential offtake for a possible future mine at Pilot Mountain, the LOI sets a framework for “cooperation between our two companies in regard to the development of Western World critical metals supply chains – with particular reference to tungsten”.

Conclusion: The interest of a US based tungsten company in the potential development of a mine at Pilot Mountain aligns with the Government’s supply chain strategy as well as with the commercial interests of the companies involved. At this stage, the agreement is non-binding pending further work to establish the technical feasibility of mine development, permitting and mine-financing.  We look forward to further news as the Pilot Mountain project progresses.

Goldstone Resources* (GRL LN) 2.9p, Mkt Cap £14m – Temporary trading suspension

• The Company reports that trading in its shares will be temporarily suspended from Monday 3 July 2023.
• Moore Stephens Audit & Assurance, new auditors, are finalising the audit of FY22 accounts but are unlikely to complete the process before the month end cut off date.
• Once Moore Stephens complete all audit procedures FY22 accounts will be released which is expected to occur during July 2023.
• Moore Stephens are taking over from DSG Chartered Accountants who tendered their resignation earlier in May after the decision to discontinue any listed (or any other public interest entities) work going forwards.

*SP Angel acts as broker to Goldstone Resources

Ormonde Mining* (ORM LN) – Suspended – Final Results for year to 2022 & Update

• Ormonde reports its annual results, with a cash balance of €3.56 million.
• Ormonde sold its La Zarza Copper-Gold asset in September 2022 for a cash consideration of €2.3 million.
• Ormonde shares remain suspended until it reaches a decision on a transaction under AIM Rule 14.
• Subsequent to the sale of La Zarza, Ormonde has taken a 20% stake in Peak Nickel, a private UK company with an early-stage battery metal exploration asset.

*SP Angel acts as Broker to Ormonde Mining

KEFI Gold and Copper* (KEFI LN) 0.6p, Mkt Cap £22m – Positive Hawiah economic studies

• The Company released results of economic studies completed over the Hawiah Polymetallic Project (27% interest) in Saudi Arabia.
• Results include PFS-level estimates for the open pit and in-house Scoping Study level estimates for the underground operation using the current Hawiah MRE.
• The project is designed to start as an open pit operation to be followed by underground mining starting at 2mtpa and peaking at 3mtpa over 10-year mine life.
• LOM mining inventory is estimated at 26.5mt with 15.3mt mined from the underground with run of mine grades of 0.73% Cu,
• The project is expected to produce gold dore, copper concentrate (~25% Cu) and zinc concentrate (~50% Zn).
• LOM production is estimated at 290kt CuEq implying ~29ktpa average annual production rate.
• Project generates $2.7bn in revenues and $0.7bn in net FCF using spot commodity prices (as of 30 Arpil) including $8,554/t Cu and $1,989/oz.
• Copper and gold account for 56% and 29% of Project gross revenues.
• Development capex and opex are estimated at $295m and ~$45/ore (both for open pit with WO ratio of 8.2x and underground).
• NPV8% (after tax) estimated at $301m and IRR (after tax and assuming 75% project debt) of 75%.
• A 50,000m drilling programme is now underway to infill the resource and provide more data for FS related work.
• The Company released an updated MRE earlier this year for 29mt at 0.89% Cu, 0.67g/t Au, 0.94% Zn and 10g/t Ag with ~18mt contained within the underground mine domain (the estimate is based on ~58,000n of drilling since Hawiah discovery in 2019).

Conclusion: Positive studies released for the Hawiah VMS Project give an indication of economic potential as the team is accelerating the pace of drilling to further de-risk the project towards the final investment decision and start of development works. The Hawiah Project is envisaged as predominantly copper operation currently estimated to run at ~29ktpa CuEq supplying the metal that is central for global de-carbonisation goals.

*SP Angel acts as Nomad and Broker to KEFI Gold and Copper

Rainbow Rare Earths (RBW LN) 8.98p, Mkt cap £54m – Rainbow signs agreement for 85% of the Phalaborwa project in South Africa

• Under the terms of the new agreement with Bosveld Phosphates, Rainbow will be able to earn into an immediate 85% interest though the payment of $5m in July.
• Rainbow is also able to acquire the remaining 15% in the joint venture through the issuance of $7m in equity in the company at anytime between end-October 2023 and end-December 2025.
• “On completion of a definitive feasibility study (“DFS”) the unincorporated joint venture will be transferred into an incorporated joint venture company and, at Rainbow’s election, Bosveld will transfer all assets required for the project into that company.”
• Rainbow has a 30.4mt resource grading 0.44% total rare earth oxides at Phalaborwa.

Conclusion:  The new agreement with Bosveld is refreshingly simple and straightforward and should enable Rainbow more easily secure finance for pilot plant development and future potential plant construction.

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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