SP Angel Morning View -Today’s Market View, Wednesday 7th February 2023

Copper prices steady as Chinese Lunar New Year celebrations start this weekend

MiFID II exempt information – see disclaimer below

GreenRoc Mining* (GROC LN) – Positive Amitsoq Exploitation License application update

Tertiary Minerals* (TYM LN) – Update on high grade Mingomba Copper Project located next to Tertiary licenses in Zambia

Versarien* (VRS LN) – Receipt of Legal Claims

Economics

US – Fed officials offered a cautious tone in their latest comments suggesting that rate reductions are possible later in the year if inflation continues to slowdown.

• Cleveland Fed head Loretta Mester (non voting) said yesterday that policymakers will probably gain confidence for a potential rate cut “later this year”.
• Neel Kashkari, a voting FOMC member and Minneapolis Fed President, said that policymakers must be “patient and cautious”.

Germany – Industrial production extended a run of negative readings to seven months in December led by chemicals and construction.

• Production is now at its lowest since 2010 if a Covid-19 related dip in 2020 is excluded.
• Industrial Production (%mom): -1.6 v -0.2 (revised from -0.7) November and -0.5 est.
• Industrial Production (%yoy): -3.0 v -4.3 (revised from -4.8) November and -2.4 est.

UK – Property prices climbed at the strongest pace since mid-2022 in January helped by falling mortgage rates, Halifax data showed.

• UK house prices rose 1.3%mom and 2.5%yoy last month.
• “The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labor market has contributed to increased confidence among buyers and sellers,” Halifax commented on the data.
• Halifax said prices have fallen just 0.7% from their peak in mid-2022.
• The average home now costs ~£291k down from a high of just over £293k.
• 2y and 5y fixed mortgage rates came down to 4.7% and 4.4% last month compared to 5.0% and 4.7% in December, according to BOE data.

Australia – The central bank left rates unchanged at 4.35%, in line with expectations, although, markets were surprised by RBA Governor hawkish comments regarding the policy outlook.

• The RBA warned that “a further increase in interest rates cannot be ruled out”.
• The message comes in contrast to the Fed latest take that rates are likely to have peaked at this point.
• The A$ is trading higher this morning.

Currencies

US$1.0764/eur vs 1.0753/eur previous. Yen 147.99/$ vs 148.59/$. SAr 18.858/$ vs 18.979/$. $1.263/gbp vs $1.256/gbp. 0.652/aud vs 0.650/aud. CNY 7.193/$ vs 7.193/$.

Dollar Index 104.08 vs 104.33 previous.

Commodity News

Lithium reserves expanded 6% to 27.7mt in 2023 despite a 80% price drop during the year, according to the US Geological Survey data.

• Argentina and China drove the increase together adding nearly 2mt.
• Global reserves have been growing steadily over the past five years yielding 14% CAGR between 2019-2023 reflecting an increase in investment in the lithium exploration space.
• BloombergNEF estimates exploration budgets to take a hit in 2024 that is likely to translate in a slowdown in the new mineral inventory build-up.

China announced the first batch of REE production quotas for 2024 setting it at 135kt, a 12.5% increase on 2023, the Ministry of Industry and Information Technology data showed.

• Last year China announced three batches taking the total for the year to 255kt, up 21%yoy and more than double the size of quotas five years before.
• China expands REE supplies to meet growing demand from rapidly growing end uses in EVs, windfarms and consumer electronics.
• The nation carefully controls the nation’s REE through a mining quota system.

Trafigura commits to a transportation of 450kt of copper products from 2025 using the Angola Lobito rail corridor, Bloomberg reports.

• The Kamoa Kakula copper complex is expected to ship 10kt in 2024 before ramping up to 240kt of copper products.

Chinese refined copper production dropped 3%mom to 970kt in January on maintenance suspensions and tight supply of blister, Shanghai Metals Market reported.

Precious metals:

Gold US$2,033/oz vs US$2,026/oz previous

Gold ETFs 83.8moz vs 83.8moz previous

Platinum US$900/oz vs US$906/oz previous

Palladium US$941/oz vs US$964/oz previous

Silver US$22.26/oz vs US$22/oz previous

Rhodium US$4,425/oz vs US$4,450/oz previous

Base metals:

Copper US$ 8,403/t vs US$8,401/t previous

Aluminium US$ 2,224/t vs US$2,218/t previous

Nickel US$ 15,900/t vs US$16,005/t previous

Zinc US$ 2,421/t vs US$2,433/t previous

Lead US$ 2,109/t vs US$2,127/t previous

Tin US$ 25,330/t vs US$25,005/t previous

Energy:

Oil US$78.8/bbl vs US$78.2/bbl previous

• Crude oil prices remain rangebound as the API reported a 0.7mb w/w build (+2.1mb exp) to US crude stocks.
• European energy prices edged lower on mild weather conditions with French nuclear reactor operating levels also falling 2% w/w to 76% of 61.4MW capacity.

Natural Gas €28.1/MWh vs €27.8/MWh previous

Uranium Futures $103.0/lb vs $105.3/lb previous

Bulk:

Iron Ore 62% Fe Spot (cfr Tianjin) US$124.7/t vs US$126.3/t

Chinese steel rebar 25mm US$569.9/t vs US$570.1/t

Thermal coal (1st year forward cif ARA) US$94.8/t vs US$94.8/t

Thermal coal swap Australia FOB US$122.3/t vs US$121.5/t

Coking coal swap Australia FOB US$310.0/t vs US$309.0/t

Other:

Cobalt LME 3m US$29,135/t vs US$29,135/t

NdPr Rare Earth Oxide (China) US$55,468/t vs US$55,474/t

Lithium carbonate 99% (China) US$12,303/t vs US$12,304/t

China Spodumene Li2O 6%min CIF US$1,000/t vs US$1,000/t

Ferro-Manganese European Mn78% min US$1,060/t vs US$1,059/t

China Tungsten APT 88.5% FOB US$305/mtu vs US$305/mtu

China Graphite Flake -194 FOB US$565/t vs US$575/t

Europe Vanadium Pentoxide 98% 5.8/lb vs US$5.8/lb

Europe Ferro-Vanadium 80% 27.55/kg vs US$27.55/kg

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

Spot CO2 Emissions EUA Price US$66.3/t vs US$66.3/t

Brazil Potash CFR Granular Spot US$292.5/t vs US$292.5/t

Battery News

China approves Mercedes-BMW charging network venture

• In November, BMW and Mercedes-Benz announced that they had reached an agreement to establish the joint venture in China “to provide Chinese customers with premium charging services.”
• It comes as a growing number of automakers have begun construction of or announced plans to build EV charging networks in China to generate additional revenue.
• The venture aims to install at least 1,000 high-power charging stations with around 7,000 charging piles in China by the end of 2026.
• China’s market regulator has approved the plans and the venture expects to begin construction this year.

California accounted for a third of US EV sales in 2023

• EV registrations in California made up 33.8% of BEV sales across the US in 2023, according to the California New Car Dealers Association (CNCDA), citing data from Experian.
• The same report also highlighted the ICE vehicle registration had dropped 7.7% yoy in the state.

Battery storage developer Alcemi secures planning permission for 3GWh of battery energy storage in UK

• Alcemi has secured planning permission for 1.5GW/3GWh of battery energy storage projects in the UK.
• The Devilla Energy Storage project, a 500MW/1GWh BESS will be located in the Fife North of Edinburg, and Rawhills Energy Storage, a 1GW/2GWh project will be in Coalburn South of Glasgow.

Company News

GreenRoc Mining* (GROC LN) 1.8p, Mkt Cap £3m – Positive Amitsoq Exploitation License application update

• The Company is planning to apply for an Exploitation License for the Amitsoq Graphite Project in South Greenland in H1/24.
• The announcement comes on the back of changes to nation’s mining laws that came into effect on 1 January 2024.
• Under latest changes the Company is able to apply for and potentially getting granted an Exploitation License before social and environmental impact assessment approval.
• Changes accelerate permitting process and allow the Company to run application process and ESIA in parallel.
• The Company estimates those changes are likely to shorten the permitting process by several months and believes the license may potentially be secured as early as before the end of 2024.
• Additionally, the Company applied for an extension (extra 50km2) of the existing exploration license package in South Greenland to cover the last area of significant graphite mineralisation found next to Amitsoq that was not already licensed by GreenRoc.
• Finally, the team now fully focused on it graphite portfolio of licenses decided to relinquish its Melville Bay Iron Project.

*SP Angel acts as broker to GreenRoc Mining

Tertiary Minerals* (TYM LN) 0.1p, Mkt Cap £2m – Update on high grade Mingomba Copper Project located next to Tertiary licenses in Zambia

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• The Company highlighted the announcement made by KoBold Metals earlier this week regarding the high grade Mingomba Copper Project update.
• KoBold owns the Mingomba Copper Project in Zambia in partnership with Australian PE firm EMR Capital and state owned mining investment vehicle ZCCM-IH.
• The $2bn underground mine is expected to come online by the early 2030s as KoBold is planning further drilling to support the feasibility study work.
• The project is estimated to host 247mt at 3.64% Cu with the Company planning to spend $150m to accelerate exploration work at the project.
• KoBold is backed by technology investors including Breakthrough Energy Ventures (initiated by Bill Gates) and Silicon Valley venture capital firm Andreessen Horowitz, as well as institutional investors such as T. Rowe Price and Canadian Pension Plan Investment Board.
• The Mingomba Project is located approximately 2km northeast of Tertiary’s Konkola West Project where KoBold is earning in an interest in the project through committing exploration funding.

*SP Angel acts as Nomad and Broker to Tertiary Minerals

Versarien* (VRS LN) 0.1p, Mkt Cap £1m – Receipt of Legal Claims

• The Company reports it has received a number of legal claims made by Neill Ricketts, a former director, against the Company and its directors.
• A preliminary hearing for case management has been scheduled for 17 July 2024.
• The Company is planning to defend the claims and are taking legal advice.

*SP Angel acts as Nomad and Broker to Versarien

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

SP Angel                                                            

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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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