SP Angel Morning View -Today’s Market View, Wednesday 7th August 2024

Gold pulls back as US dollar bounces after BoJ statement on no more rate hikes

MiFID II exempt information – see disclaimer below

Adriatic Metals (ADT1 LN) – Paul Cronin, CEO and founder of Adriatic Metals steps down

Andrada Mining (ATM LN) – £7.5m bank loan agreement

Arcadium Lithium (ALTM US) – Capex cut as weak lithium prices weigh on balance sheet

Botswana Diamonds (BOD LN) – £250,000 fundraising

Bushveld Minerals* (BMN LN) – Grant of options

First Tin (1SN LN) – Latest metallurgical work from Taronga

Gem Diamonds (GEMD LN) – Letšeng continues to deliver large white diamonds

Glencore (GLEN LN) – H1 results include confirmation that the coal and carbon steel materials businesses will be retained

Oriole Resources* (ORR LN) – Bibemi gold mineralised strike length extended in Cameroon

Tertiary Minerals* (TYM LN) – FLASH NOTE – Zambian Exploration Agreement with FQM

Copper prices ($8,800/t) weaken alongside iron ore as dollar strengthens into calmer markets

• Copper prices have fallen $200/t overnight, weakening alongside a number of base metals.
• Nickel is down 0.6% whilst zinc and tin have fallen 1.4% and 2.3% respectively.
• Iron ore prices have pared gains, on rising surplus concerns as majors ramp up output.
• Chinese steel exports rose to eight year highs, with a number of countries launching anti-dumping probes into the move.
• Zambia is looking to boost copper output to 1mtpa by 2027, rising subsequently to 3mtpa.
• The dollar has strengthened following its Yen-driven weakness on Monday. This has been triggered by higher yields, with expectations of emergency rate cuts fading on stronger US services data.
• China import data shows weak levels for iron ore, coal, copper and natural gas in July, as the economy struggles to gather momentum.
• BHP is negotiating with Spence mine workers over an ongoing labour strike threat.

Gold prices pull back as US dollar bounces after BoJ statement on no more rate hikes

• Gold prices pulled back to $2,395/oz today despite BoJ statements as US Treasuries weakened following their recent rally as chance of intermeeting rate cut fades
• The BoJ cooled fears of the Carry Trade being further unwound in a statement overnight
• The news stabilised the USD / JPY exchange rate

Carry trade:

We have little doubt that Japanese equities fell as the Carry Trade started to unwind with carry traders buying Yen with US dollars while selling local equities.

• Negative Japanese interest rates had created a significant carry trade with traders borrowing cheaply in Japan while benefitting from higher returns in Japanese equities, US Treasuries, technology companies etc…
• While these trades can unwind fast, there is still plenty of margin left in the carry trade with BoJ rates at 0.25%. More importantly the BoJ plans to unwind its massive bond buying program as they invoke quantitative tightening.
• While a relatively small adjustment in rates can prompt allot of momentum and algorithm-driven selling we suspect the carry trade will continue to run and generate margins off higher-yielding US treasuries and equities.
• We suspect markets will continue to experience elevated volatility while adjustments are made to Japanese and US interest rates.

Economics

US – ISM Services rise to to 51.4 in July from 48.8 in June

• Business activity / production rose to 54.5 from 49.6.
• New orders rose to 52.4 from 47.3.
• Employment climbed to 51.1 from 46.1.
• Prices rose to 57.0 from 56.3.
• We understand the Services PMI for July corresponds to a 0.8% increase in annualised real GDP.
• US trade deficit US$73.1bn in June vs US$75.1bn in May.
• Real Clear Markets / TIPP Economic Optimism index rose 1pt to 45.2 in August following a 3.7pt increase to 44.2 in July
• LMI logistics managers index 56.5 in July vs 55.3 in June

China – Exports came in below forecasts while imports jumped more than estimated trade data released this morning showed.

• Exports were up 7%yoy, down on 8.6%yoy recorded in June and 9.7% forecast by Reuters.
• Imports climbed 7.2% recovering post a decline of 2.3% the previous month and beating a 3.5% increase forecast.
• Exports (%yoy, Jul/Jun/Est): 7.0/8.6/9.5
• Imports (%yoy, Jul/Jun/Est): 7.2/-2.3/3.2

Japan – The yen slides as the central bank’s deputy governor played down chances of another near term rate hike.

• Shinichi Uchida comments contrasted with Governor Kazuo Ueda hawkish remarks last week when the BOJ unexpectedly raised interest rates.
• High market volatility will be considered by the central bank in its rate decision Uchida said.
• “As we’re seeing sharp volatility in domestic and overseas financial markets, it’s necessary to maintain current levels of monetary easing for the time being,” Uchida noted.
• The yen is trading at 147 / USD this morning after touching a high of 142 earlier this week.

Germany – Industrial production picked up in June from the previous month, although, on annual basis output remained down as export oriented sector struggles with slowing overseas demand.

• Trade continued to struggle with exports down month-on-month.
• Industrial Production (%mom, Jun/May/Est): 1.4/-3.1(-2.5)/1.0
• Industrial Production (%mom, Jun/May/Est): -4.1/-7.2(revised from -6.7)/-4.2
• Exports (%mom, Jun/May/Est): -3.4/-3.1(revise from -3.6)/-1.5
• Imports (%mom, Jun/May/Est): 0.3/-5.5(revised from -6.6):2.5

UK – Property prices climbed 0.8%mom in July beating estimates for a 0.3%mom, Halifax reports.

• Average house price in the UK now sits just over £290k with prices up 2.3%yoy.
• Halifax expects house prices “to continue a modest upward trend” for the rest of the year on the back of lower borrowing costs.

Middle East – US Secretary Antony Blinken warned from further attacks in the Middle East amid a potential retaliation from Iran following an assassination of Hamas political leader in Tehran last week.

Currencies

US$1.0922/eur vs 1.0936/eur previous. Yen 146.48/$ vs 145.62/$. SAr 18.356/$ vs 18.520/$. $1.270/gbp vs $1.275/gbp. 0.655/aud vs 0.651/aud. CNY 7.181/$ vs 7.148/$.

Dollar Index 103.12 vs 103.01 vs previous

Precious metals:         

Gold US$2,390/oz vs US$2,405/oz previous

Gold ETFs 82.6moz vs 82.6moz previous

Platinum US$920/oz vs US$920/oz previous

Palladium US$883/oz vs US$853/oz previous

Silver US$26.88/oz vs  US$27/oz previous

Rhodium US$4,625/oz vs US$4,625/oz previous

Base metals:   

Copper US$ 8,809/t vs US$8,856/t previous

Aluminium US$ 2,267/t vs US$2,253/t previous

Nickel US$ 16,330/t vs US$16,270/t previous

Zinc US$ 2,551/t vs US$2,631/t previous

Lead US$ 1,953/t vs US$1,967/t previous

Tin US$ 29,580/t vs US$29,320/t previous

Energy:           

Oil US$76.6/bbl vs US$76.7/bbl previous

Natural Gas €35.9/MWh vs €36.2/MWh previous

Uranium Futures $81.5/lb vs $81.4/lb previous

Bulk:   

Iron Ore 62% Fe Spot (cfr Tianjin) US$102.6/t vs US$104.4/t

Chinese steel rebar 25mm US$497.0/t vs US$501.2/t

Thermal coal (1st year forward cif ARA) US$125.5/t vs US$123.8/t

Thermal coal swap Australia FOB US$146.0/t vs US$144.5/t

Coking coal Dalian Exchange futures price US$195/t vs US$196.0/t

Other:  

Cobalt LME 3m US$26,500/t vs US$26,500/t

NdPr Rare Earth Oxide (China) US$52,074/t vs US$52,181/t

Lithium carbonate 99% (China) US$10,373/t vs US$10,562/t

China Spodumene Li2O 6%min CIF US$940/t vs US$940/t

Ferro-Manganese European Mn78% min US$995/t vs US$995/t

China Tungsten APT 88.5% FOB US$325/mtu vs US$325/mtu

China Graphite Flake -194 FOB US$465/t vs US$465/t

Europe Vanadium Pentoxide 98% 4.7/lb vs US$4.7/lb

Europe Ferro-Vanadium 80% 25.15/kg vs US$25.15/kg

China Ilmenite Concentrate TiO2 US$320/t vs US$320/t

China Rutile Concentrate 95% TiO2 US$1,399/t vs US$1,406/t

Spot CO2 Emissions EUA Price US$67.6/t vs US$67.6/t

Brazil Potash CFR Granular Spot US$297.5/t vs US$297.5/t

Germanium China 99.99% US$2,145.0/kg vs US$2,145.0/kg

China Gallium 99.99% US$440.0/kg vs US$440.0/kg

Battery News

Kia’s EV sales doubled in Jan-July period in US

• Kia’s EV sales in the United States doubled in the January to July period, driven by strong demand for the EV9 SUV model (Newsroom Odisha).
• According to the Korea Automobile & Mobility Association, Kia sold 33,957 EVs, up from 16,941 units the previous year.
• This growth is notable given that the overall U.S. EV market grew by only 0.9% in the same period.
• This success helped Hyundai Motor Group achieve an 11.1% market share in the U.S. EV market, the highest in the group’s history.
• EVs accounted for 44.5% of Kia’s total eco-friendly vehicle sales, nearly doubling from 23.7% the previous year.

‘Unprecedented’ demand sees EVs dominate Aussie roads in record numbers

• Australia is set to reach a milestone of 100,000 EV sales this year, driven by unprecedented demand despite economic pressures (Yahoo News).
• Data shows 30,000 BEV and PHEV were sold in the second quarter of 2024, the highest ever for a single quarter.
• EV Council CEO Samantha Johnson highlights that these record-breaking sales indicate a strong demand for EVs, urging the government to support this transition through incentives and programs.
• Johnson also stresses the importance of combating misinformation and promoting the benefits of EVs, including cost savings and reduced pollution.

New car sales in UK continue to rise but likelihood of achieving EV targets looks bleak

• In July, new car sales in the UK rose by 2.5%, marking the 24th consecutive month of growth, with 147,517 cars registered (This is Money).
• Despite overall growth, private EV registrations declined, with fleet sales sustaining the market.
• Diesel and petrol car sales continued to drop, while hybrid and plug-in hybrid vehicle sales increased.
• Fully electric cars accounted for 18.5% of sales, but only 16.8% of the year-to-date market share, falling short of the 22% target mandated by the government.
• The Society of Motor Manufacturers and Traders calls for increased government incentives and infrastructure support to boost EV uptake and meet climate goals.

Tesla’s Sales Of Chinese-Made EVs Finally Rebounded

• In July, Tesla’s sales of Chinese-made EVs rebounded, increasing 15% year-over-year (InsideEVs).
• Tesla Giga Shanghai’s wholesale shipments, which include local retail sales in China and exports, totaled 74,117 units, showing growth after several months of decline.
• Despite this rebound, Tesla’s total wholesale sales for the year are still 7.4% lower than the same period last year, with 500,740 units sold so far.
• The market remains challenging, as indicated by the year-over-year decline in BYD’s all-electric car sales in July.

Company News

Adriatic Metals (ADT1 LN) 134p, Mkt cap £454m – Paul Cronin, CEO and founder of Adriatic Metals steps down

• We are very sorry to see Paul Cronin step down from his role as ceo from Adriatic Metal.
• Cronin went over and above any normal commitment in the evaluation and development of the company’s mines in Bosnia and Herzegovina.
• While we did not always share Cronin’s vision on the company’s ability to build the Vares project in such a complex socio-political context we have been hugely impressed by the progress made to date.
• The level of progress goes to show that a truly determined and dedicated ceo can achieve much against a degree of adversity.
• The move may also follow a succession of tweets in response to an investor who was speculating that the Adriatic team and Orion knew of certain issues ahead of certain statements.
• Forestry:  A press release relating to the Constitutional Court of Bosnia & Herzegovina, which stated the Federal BiH law permitting the removal of state forest for temporary use should be repealed remains a major issue.
• The throwing of a significant impediment into the progress of the company at a critical time is no great surprise in this region and Adriatic will have to appeal to higher authorities to ensure its operations are allowed to progress.
  • “During the course of 2023 certain routine applications were delayed, and the Company was informed that this was a result of internal political positioning within the governing coalition in the Federation of BiH. To ensure continuity of the Project, in December 2023 the Government of the Federation passed a law to allow the approval of these routine applications, clearing unnecessary roadblocks, not only for Adriatic, but for all major development projects in the Federation.
  • Based on the limited information contained within the Court’s news release, Adriatic assumes that this decision will delay the removal of trees on the extended tailings storage facility, which is due to be constructed in the coming months at the Vares Processing Plant site. As the Company awaits the full decision of the Court to be published, Adriatic will continue to use the current tailings storage facility, which has capacity to continue to receive material until Q1 2025.
  • Adriatic will continue to engage with all levels of Government to assess the legal and legislative consequences of the Court’s decision as every major project in the Federation could potentially be impacted.
  • Adriatic is also reviewing the possible permitting of several alternative tailings storage facilities within the Company’s concession area, however the full decision of the Court will need to be reviewed before any alternative options are progressed. Adriatic expects the full decision to be published by the Constitutional Court in the coming days.”

Conclusion: We suspect the sudden loss of Paul Cronin will be a severe impediment to the company. Cronin spent two years at site during the covid pandemic leading the project development, motivating the team and driving its progress.

If more CEOs showed this level of drive and personal dedication the junior mining would be a better place.

Andrada Mining (ATM LN) 3.25p, Mkt cap £51m – £7.5m bank loan agreement

• Andrada Mining reports that its subsidiary, Uis Tin Mining Company, has agreed N$175m (~£7.5m) loans with the Namibian based Bank Windhoek.
• N$100m (~£4.2m) of the loans is in a 6-year term loan accruing interest at Namibia’s Prime Lending rate of 11.5% plus a 1% premium.  Capital repayments are suspended over the first 12 months and thereafter are repayable quarterly.
• In addition, Bank Windhoek will refinance N$50m (~£2.1m) of 12 month working capital facilities at an interest rate of the Namibian Prime rate less 0.5% or 11%.
• The Bank will also finance N$15m (~£0.63m) “for use as cashflow against future VAT payments” and an N$10m (£0.42m) “guarantee to the Namibia Power Corporation (Pty) Limited in relation to a deposit against the right to a supply of electrical power”.
• CEO, Anthony Viljoen, welcomed the support of Bank Windhoek which “underscores our commitment to Namibia and its thriving mining industry … [and said that the funds will] … be instrumental in accelerating our exploration efforts, enhancing our production capabilities, and creating new job opportunities for Namibians”.
• Emphasising the bank’s commitment to “fostering progressive partnerships with businesses through funding to provide impetus to local economic growth … [Bank Windhoek’s CEO, Baronice Hans, said] … Namibia presents a compelling investment opportunity for our bank due to its stable political climate, robust legal framework for mining operations, and abundant natural resources”.

Conclusion: Local banking support recognises the strategic economic contribution of Andrada Mining’s Uis mine to Namibia.

Arcadium Lithium (ALTM US) $2.64, Mkt cap $2.8bn – Capex cut as weak lithium prices weigh on balance sheet

• Arcadium, the lithium company that formed as a result of Allkem and Livent’s merger, reports quarterly results.
• The Company realised an average hydroxide/carbonate price of $17.2k/t, vs current averages c. $10.5k/t. This was a result of ‘securing long term contracts with strategic customers.’
• Revenue reported at $255m, with adjusted EBITDA at $99m.
• Company notes weak pricing across the lithium spectrum, and is focused on cost savings.
• As regards cost savings, the Company is looking to slash $60-80m in 2024 from renegotiating with supplier contracts, and removing legacy costs from the pre-merger entities.
• The company is aiming to reduce costs of $125mpa by three  years from merger completion.
• Hydroxide and carbonate sales expected to increase 25% yoy for 2024, and a further 25% increase in 2025.
• Expansions stemming from the Olaroz and Fenix projects in Argentina, expected to hit nameplate of 40kt/33kt respectively in 2025.
• The Company is pausing investment in the James Bay/Galaxy project in Canada, which was expected to produce 311ktpa spodumene concentrate over a 19 year LOM.
• They will explore opportunities to bring a partner into the project.
• In Argentina, they will look to develop the 25kt LCE Salar del Hombre Muerto, aiming to develop the asset stages sequentially rather than simultaneously as planned.
• CAPEX reductions of $500m now guided over the next 24 months.
• The Company provides sensitivity analysis showing guided adj. EBITDA at $380m for $12/kg average market price, or $470m for $15/kg.

Botswana Diamonds (BOD LN) 0.33p, Mkt Cap £4.5m – £250,000 fundraising

1. Botswana Diamonds reports that it has raised £250,000 via the issue of ~78.1m shares at a price of 0.32p/share.
2. The additional shares, which represent around 6.5% of the enlarged capital, include “one share purchase warrant attached with the right to subscribe for one new Ordinary Share at 0.5p per Ordinary Share with an expiry date of two years from 7^th August 2024”.
3. Directors John Teeling, James Finn and James Campbell are subscribing for 27.5% of the placing with Messrs Teeling and Finn each subscribing for ~7.8m shares and Mr Campbell subscribing for approximately 5.9m shares.
4. The additional funds will “be used to fund exploration activities during the current year in Botswana and South Africa”.

Conclusion: Funding to support the continuing exploration work in Botswana and South Africa is being supported by the directors.

Bushveld Minerals* (BMN LN) 0.6p Mkt Cap £14m – Grant of options

• The Company granted 37.5m nil cost options (zero exercise price) to certain directors, senior management and employees of the Company.
• Options were recommended by the remuneration committee to retain key executives who are critical to the future of the business.
• Options will vest in two tranches with 50% coming into effect on 31 July 2025 and the remaining 50% on 31 January 2026.
• Craig Coltman (CEO) has been granted 6.4m options.

*SP Angel act as nomad and broker to Bushveld Minerals

First Tin (1SN LN) 4.75p, Mkt Cap £15m – Latest metallurgical work from Taronga

• First Tin has provided information on further metallurgical testing on a 300kg bulk sample of material taken from an adit at its Taronga tin project in New South Wales.
• The work, which forms part of continuing work to optimise the flowsheet described in the May 2024 Definitive Feasibility Study (DFS), “suggests better recoveries than those previously reported and used in the Definitive Feasibility Study”.
• A combination of recovering 91.2% of the contained tin in the crushing stage and 82.9% recovery in the coarse gravity circuit resulted in an overall recovery of 75.6% to a 66.7% tin concentrate which the announcement describes as “significantly higher than the previously reported 71.5% recovery from a low-grade sample (head grade, 0.10% Sn)”.
• The sample used in the latest testing averaged 0.15% tin
• In addition, “parallel testing … [delivered] … recovery of an additional 4.0% of starting tin to a 71.4% Sn concentrate … from a 2^nd pass through the VSI … [vertical shaft impact crusher] … followed by coarse gravity circuit processing”.
• Commenting on the test results, CEO, Bill Scotting, said that results from “the simple, coarse gravity tin circuit are much better than the recoveries used in the recently announced DFS … [and that they] … confirm the readily treatable and upgrading nature of the Taronga mineralisation”.
• He also said that “Potential for even higher recoveries can also be seen with slight modifications to the current process plant design.  It is proposed to collect more samples to repeat this work and confirm these excellent recoveries”.

Conclusion: Continuing test work has shown improved recovery rates at First Tin’s Taronga deposit building on the results from the DFS work earlier this year.  Testing continues and we look forward to further results as the prork progresses.

Gem Diamonds (GEMD LN) 12.65p, Mkt Cap £17.7m – Letšeng continues to deliver large white diamonds

• Gem Diamonds, which has already reported the recovery of eight diamonds larger than 100 carats so far this year has now announced the recovery of a 9^th, 145.55 carat Type II white diamond, from its Letšeng mine in Lesotho.
• The recent discovery follows the recovery of a 123.2 carat Type II white diamond in July and a 172.06 carat Type II white diamond announced in early June.
• The Letšeng mine has an established history of producing large diamonds including the 1,109 carat ‘Lesedi La Rona’, discovered in 2017 and thought to be the world’s second largest diamond as well as the 910 carat ‘Lesotho Legend’ recovered in 2019, and understood to be the fifth largest gem quality diamond ever discovered, which realised US$40m when sold in Antwerp.

Glencore (GLEN LN) 394.8p, Mkt cap £48bn – H1 results include confirmation that the coal and carbon steel materials businesses will be retained

• Reporting what CEO, Gary Nagle, described as a period of “strong strategic achievements for the Group”, Glencore reports a 33% decline in adjusted EBITDA of US$6.3bn for the six months to 30^th June (2023 – US$9.4bn) and a net loss of US$0.2bn (2023 – profit US$4.6bn).
• The company ascribes the reduction in EBITDA to “the normalisation of energy markets from the severe disruptions and volatilities seen over 2022/23”.
• Glencore also confirms that “Adjusted EBITDA mining margins were 28% in our metals operations and 31% in our energy operations”.
• Glencore also confirms that, following “an extensive consultation with shareholders … [and consideration of] … both risk and opportunity scenarios“ it will retain its coal and carbon steel materials business.
• Mr. Nagle highlighted the streamlining of the group’s industrial businesses via the “sale of our Volcan stake and … the addition of a 77% interest in Elk Valley Resources”.
• Industrial activities contributed ~72% (US$4.5bn) to the adjusted EBITDA (2023 – US$7.4bn) with Glencore’s marketing businesses delivering the balance of US$1.8bn (2023 – US$2.0bn).
• Metals & Minerals contributed US$2.8bn of the EBITDA of the industrial unit (2023 – 3.1bn) with a further US$2.1bn from the energy and steelmaking coal operations (2023 – US$4.7bn) offset by outflows of US$0.3bn (2023 – US$0.3bn) for corporate and other activities.
• US$1.9bn of the Metals & Minerals EBITDA was generated by Glencore’s copper operations (2023 – US$2.1bn) with a further US$0.6bn contribution from zinc (2023 – US$0.6bn).
• Net debt declined by 26% or ~US$1.3bn during H1 to US$3.6bn (31^st December 2023 – US$4.9bn).

Oriole Resources* (ORR LN) 0.31p, Mkt cap £12m – Bibemi gold mineralised strike length extended in Cameroon

• Oriole Resources provides an update from their Bibemi exploration programme in Cameroon.
• The Company is working with BCM International over the prospect, who are funding up to $4m in exploration expenditure for a 50% interest.
• Oriole have been conducting mapping and rock-chip sampling at Bibemi.
• Today, Oriole announces they have identified an extension of the mineralised strike length at Bibemi, south wst to Lawa West.
• 163 vein rock-chip samples were collected (selectively), with 17 returning samples over 0.5g/t Au.
• Highlights included samples of 55g/t Au and 38g/t Au.
• The mineralisation lies in similar quartz-tourmaline veins as host the 375koz MRE grading 2.3g/t Au at Bakassi Zone 1.
• Following this recent addition of mineralised strike, the total trend length sits at 17km.
• Furthermore, the Company has identified potential for mineralised corridors trending northeast, for previously unidentified drill targets.

Conclusion: Oriole and BCM continue to discover gold potential over the Bibemi licence package in the significantly underexplored Cameroon. Today, they extend the mineralised strike length of the Project, which already holds 375koz in an inferred resource. Both parties see the asset as holding potential to support a considerably larger resource, and the current, fully funded 62 hole drilling programme over 7,060m is expected to validate this thesis. We look forward to initial drill results, due this quarter, and would expect the stock to further rerate if the thesis of additional mineralisation is validated by the drill bit.

*SP Angel acts as Broker to Oriole Resources

Tertiary Minerals* (TYM LN) 0.12p, Mkt Cap £3m – FLASH NOTE – Zambian Exploration Agreement with FQM

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• Tertiary Minerals’ 86% owned subsidiary, Copernicus, has signed a binding letter of agreement with First Quantum Minerals.
• Copernicus holds the Mukai Copper Project, with Tertiary the majority shareholder.
• The Binding Agreement sees First Quantum committed to fund a minimum of $1.5m on exploration over 24 months, with $0.5m of this funded in Year One.
• Mukai lies adjacent to First Quantum’s Sentinel project and hosts a copper-in-soil anomaly that lies along strike from FQM’s Trident complex, which hosts the Sentinel and Enterprise mines.
• Sentinel hosts a M&I resource of 754mt at 0.43% Cu for 3.2mt contained copper.
• The Mukai copper-in-soil anomaly covers an area of 1,300m x 400m which stretches into FQM’s property boundary.
• Following the two year exploration due diligence period, FQM will be able to earn an initial 51% JV interest over Mukai.
• This will be enabled through the delivery of a Mineral Resource containing a minimum of 80kt within a further 24 months.
• They will then be able to earn a further 29% interest by finalising a Mining Study and providing a Notice of Intent to Mine within a third two-year period.
• First Quantum will be responsible for sole funding the project until the Government has approved permits for the construction of a mining project.
• Upon construction decision, Copernicus/Tertiary will have the right to contribute a 20% equity provision or dilute to 10%, a level at which their interest will convert into a 1.5% NSR.
• First Quantum has a track record in discovering and building copper projects second to none.
• The Company has guided to 370-420kt Zambian Cu in 2024, predominantly from Kansanshi and Sentinel and is expected to generate $1.3bn in FY24 EBITDA.
• They have proven greenfield exploration success, having discovered the Lonshi deposit in the DRC in 2000 and Frontier in 2003. First Quantum was able to develop Frontier within 15 months. In Zambia, FQM successfully developed the Kansanshi Project after buying the asset from Phelps Dodge.

Conclusion: Tertiary has secured another exciting agreement with one of Zambia’s major operators, having previously signed technical cooperation agreements with FQM and JVs with KoBold Minerals. Mukai remains highly prospective, with encouraging but minimal soil sampling results reported to date. First Quantum brings the deep pockets and technical expertise that are invaluable when progressing greenfield exploration.

*SP Angel acts as Nomad and Broker to Tertiary Minerals

No.1 in Base Metals: SP Angel mining team awarded No 1. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q1 2024

No.1 in Copper:  “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”

No1. In Gold:  “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”

The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020

Analysts

John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490

Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484

Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474

Sales

Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472

Abigail Wayne – Abigail.Wayne@spangel.co.uk – 0203 470 0534

Rob Rees – Rob.Rees@spangel.co.uk – 0203 470 0535

Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471

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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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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