SP Angel – Today’s Market View, Wednesday 27th May 2026

Copper holds steady as Codelco halts operations following earthquake

MiFID II exempt information – see disclaimer below

Andrada Mining (ATM LN) – Namibian banks grant long term loan facilities for the Uis mine as Lithium Ridge drilling is completed

Elemental Royalty (ELE CN) – Earn-in agreement formed with KGHM in Nevada

KEFI Gold and Copper* (KEFI LN) – BUY, Target 4.2p – Operating and financial update

CLICK FOR PDF

Kendrick Resources (KEN LN) – Initial work shows depth continuity to Namibian rare-earths mineralisation as company moves towards an initial MRE

Meridian Mining (MNO LN) – DFS on track for 4Q26 as Installation License submitted

Premier African Minerals (PREM LN) – Progress on commissioning the Zulu lithium plant, Zimbabwe

Silvercorp Metals (SVM CN) – Quarterly results supported by transition to shrinkage mining at Ying

Sovereign Metals* (SVML LN) – Monazite (REEs) confirmed across four pits at the Kasiya rutile and graphite project in Malawi

Copper ($13,640/t) holds steady as Codelco halts operations following earthquake

• Copper is proving resilient above the $13,500/t mark, supported by major LME withdrawals on Friday.
• US COMEX premiums continue to draw metal into the States, leaving reduced available copper in high-demand Asian regions.
• Elsewhere, Codelco temporarily halted operations following a 6.9 magnitude earthquake in the Antofagasta region.
• No critical infrastructure was damaged, Reuters reports, and major supply disruption is not expected.

Gold ($4,496/oz) weakens below $4,500/oz level as peace enthusiasm fades

• Gold prices have failed to rally from Monday’s strength, having risen over $4,560/oz.
• The metal continues to trade in line with peace talks, with the weekend bringing more progress on key issues between the US and Iran.
• However, escalated hostilities on Tuesday limited gold’s upward momentum.
• The dollar has bounced marginally in line, however US Treasuries have held marginal strength.
• The 10 year has fallen from 4.65% yield to 4.47% as traders look to sliding crude prices for signs of easing inflationary pressures.

Lithium – SQM and Codelco are budgeting US$3bn investment to develop DLE tech to extract lithium at its lithium deposits in Atacama Desert.

• The Novandino Litio partnership expects to submit an EIS to regulators in June.
• Preliminary development plans subject to successful permitting includes construction start toward the end of the decade and full capacity in mid-2030s.
• FID is yet to be made.
• The project is designed to gradually replace the traditional evaporation system with some ponds to remain for potash production and pre-concentration.
• Novandino was formed late last year after lithium supplier SQM agreed to hand over a majority stake in its Chilean brine assets to state-owned Codelco in exchange for extending operations.

Coal – China closes >100 coal mines for safety inspections following deadly blast

• The move comes at a time when China is using its strategic oil supply due to the blockade of the Strait of Hormuz.
• Over 82 people are confirmed dead with >120 injured in a coal-gas explosion at a mine run by the Shanxi Tongzhou Group.
• The mine had been fined twice in recent years for poor safety processes.
• The closures cut >300,000t of coal capacity per day.

China state planner outlines new plan to upgrade power grid costing >CNY5tn to 2030

• Political Bureau of the Communist Party of China Central Committee and the State Council Executive Meeting are working to better balance China’s power grid.
• The State Planner is looking to invest in the ‘Six Networks’ Investment to stabilize uncertainty over domestic supply-demand imbalances.
• Investment in the ‘Six Networks’ is estimated at >CNY 7tn  (~US$ 1tn) in 2026 including related investment according to the NDRC.
• Other infrastructure:
• China has ~3.9mkm of underground pipelines with many needing urgent replacement to improve urban drainage capacity and stem water supply leakage.
• The new 5-year plan expects CNY 5tn to build and renovate about 770,000km of gas, water supply and drainage, and heating pipelines, enhancing urban infrastructure safety and resilience.
• Funding:
  • NDRC allocated CNY 217 bn in ultra-long special treasury bonds to 336 major projects.
  • Local governments issued CNY 1.3 tn in new special bonds.
• The news is undoubtedly good for copper and for other infrastructure construction materials such as rebar, vanadium and niobium for strengthening concrete.

Coal mine gas explosion in China: https://www.itv.com/news/2026-05-23/at-least-82-killed-in-coal-mine-gas-explosion-in-china-local-media-reports

Guardian Metal Resources – Tungsten & Pilot Mountain mine : https://invest.investorshub.com/innovationreport/

IG TV Gold report: https://youtu.be/PliTL-z0n54?si=HvvFdldYY7oHK7s7

Currencies

US$1.1646/eur vs 1.1630/eur previous. Yen 159.33/$ vs 159.16/$. SAr 16.366/$ vs 16.338/$. $1.345/gbp vs $1.347/gbp. 0.714/aud vs 0.716/aud. CNY 6.785/$ vs 6.786/$.

Dollar Index 99.08 vs 99.08 previous.

Economics

Brent is down trading in the $96-97 range on hopes for an announcement of a peace deal between the US and Iran.

• Not much new developments there as sides continue with negotiations through mediators.

Japan – The BOE highlighted the need for vigilance over the impact of higher oil prices on inflation expectations.

• Kazuo Ueda comments are likely to see increased speculation over the prospects of interest rate hikes when authorities next meet on June 16.
• “A temporary shock can become persistent if it changes wages, expectations and price-setting behaviour.”
• Markets are not expecting a hike before 1Q/2Q CY27 at the moment.

China – Profits jump in April led by electronics industry pointing to a potential K-shaped recovery.

• Electronics sector profits jumped 108% in the first four months, accounting for nearly half of the headline expansion.
• Higher oil prices also helped lift profits at oil and gas producers.
• However, a large share of the economy is weakening as domestic demand and private investment are struggling.
• Consumer facing factories are struggling to pass on higher raw material costs.
• Industrial Profits (%yoy, Apr / Mar / Est): 24.7 / 15.8 / NA

UK – The price cap on energy bills will increase by 13% from July to the highest level in more than two years.

• Annual energy will rise to £1,862 for a typical household between July and September, up £221 on the previous cap.
• The increases was less than the one seen in 2022 on the back of Russian invasion into Ukraine due to increase use of renewables.

Australia – Inflation numbers came in below expectations cooling speculation the RBA may hike for a 4^th time next month, although, the headline CPI continues to run at over 2-3% target.

• The RBA is expected to keep rates unchanged at 4.35% on June 15-16.
• Housing was the largest contributor to annual inflation in April with a rise of 6.3%.
• Higher fuel, logistics and petrochemical prices are flowing through the economy driving the headline number higher.
• CPI (%mom, Apr / Mar / Est): 04 / 1.1 / 0.6
• CPI (%yoy, Apr / Mar / Est): 4.2 / 4.6 / 4.4

Iran – US fires on IRGC mine-laying vessel in Strait of Hormuz

• The move indicates the IRGC are working to try to restrict traffic in the strait.
• The US also struck a SAM missile site in Bandar Abbas which was targeting US aircraft in a defensive move.
• The US Navy has resumed escorting ships through the Strait under “Project Freedom” and is expected to assist tankers and container ships this week (WSJ)
• Trump says “The Enriched Uranium (Nuclear Dust!) will either be immediately turned over to the US to be brought home and destroyed or, preferably, in conjunction and coordination with the Islamic Republic of Iran, destroyed in place or, at another acceptable location, with the Atomic Energy Commission, or its equivalent, being witness to this process and event”
• Mojtaba Khamenei, Iranian Supreme Leader, claimed Israel is approaching “the end” of its existence.
• The IRGC claim to have shot down an MQ-9 drone indicating the presence of a new IRGC air defense system.

Lebanon – Israel is ramping up the pressure on Hezbollah in Lebabon

• Hezbollah was formed by the IRGC to export the Iranian Islamic Revolution, to promote Shi’ite Islamist ideology.

Precious metals:

Gold US$4,483/oz vs US$4,532/oz previous

Gold ETFs 98.5moz vs 98.6moz previous

Platinum US$1,928/oz vs US$1,952/oz previous

Palladium US$1,369/oz vs US$1,380/oz previous

Silver US$75.0/oz vs US$76.4/oz previous

Silver ETFs 794.2moz vs 794.4moz previous

Rhodium US$9,300/oz vs US$9,400/oz previous

Base metals:

Copper US$13,640/t vs US$13,673/t previous

Aluminium US$3,678/t vs US$3,671/t previous

Nickel US$18,990/t vs US$18,700/t previous

Zinc US$3,531/t vs US$3,593/t previous

Lead US$2,016/t vs US$2,020/t previous

Tin US$54,465/t vs US$54,915/t previous

Energy:

Oil US$97.3/bbl vs US$98.2/bbl previous

IG interview: Oil, LNG and helium – what the Middle East conflict means for energy markets (link)

• Crude oil prices eased further even as the US Secretary of State Marco Rubio commented that reaching an agreement with Iran on a deal to re-open the Strait of Hormuz could still take several days.
• European energy prices also edged lower on positive market sentiment as France’s average nuclear generation was flat w/w at 68% of the country’s 61.4GW maximum capacity.
• Northern Oil and Gas has agreed to purchase a 25% interest in the light-oil Duvernay assets owned and operated by Parallax Energy for C$350m, which are expected to produce average output of ~4kboe/d in 2027 (80% oil) at $7.5/boe opex costs. NOG expects to incur up to $40-$45m in capex on the assets post-closing in 2026, and $45–$50m in 2027.
• BP’s Board has unanimously decided that Albert Manifold should no longer serve as Chair and Director with immediate effect following serious concerns raised that relate to important governance standards, oversight and conduct.

Natural Gas €46.6/MWh vs €47.3/MWh previous

Uranium Futures $84.7/lb vs $84.7/lb previous

Bulk:

Iron Ore 62% Fe Spot (Singapore) US$105.2/t vs US$105.2/t

Chinese steel rebar 25mm US$491.6/t vs US$491.6/t

HCC FOB Australia US$239.0/t vs US$239.0/t

Thermal coal swap Australia FOB US$137.0/t vs US$137.0/t

Other:  

Cobalt LME 3m US$56,290/t vs US$56,290/t

NdPr Rare Earth Oxide (China) US$99,489/t vs US$101,163/t

Lithium carbonate 99% (China) US$25,572/t vs US$25,862/t

China Spodumene Li2O 6%min CIF US$2,570/t vs US$2,630/t

Ferro-Manganese European Mn78% min US$1,035/t vs US$1,035/t

China Tungsten APT 88.5% FOB US$1,625/mtu vs US$1,625/mtu

China Tantalum Concentrate 30% CIF US$233/lb vs US$233/mtu

China Graphite Flake -194 FOB US$415/t vs US$415/t

Europe Vanadium Pentoxide 98% US$6.0/lb vs US$6.0/lb

Europe Ferro-Vanadium 80% US$27.8/kg vs US$27.8/kg

China Ilmenite Concentrate TiO2 US$240/t vs US$239/t

US Titanium Dioxide TiO2 >98% US$2,809/t vs US$2,809/t

China Rutile Concentrate 95% TiO2 US$1,157/t vs US$1,157/t

Spot CO2 Emissions EUA Price US$65.1/t vs US$65.1/t

Brazil Potash CFR Granular Spot US$405.0/t vs US$405.0/t

Germanium China 99.99% US$3,825.0/kg vs US$3,825.0/kg

China Gallium 99.99% US$400.0/kg vs US$400.0/kg

Europe Molybdenum Oxide 57% US$30.0/lb vs US$30.0/lb

EV & Battery news:

Company news:

Andrada Mining (ATM LN) 3.88p, Mkt Cap £86m –Namibian banks grant long term loan facilities for the Uis mine as Lithium Ridge drilling is completed

• Andrada Mining, which earlier this month announced an expansion to its exploration drilling programme at its Lithium Ridge JV with SQM in Namibia, reports the completion of the drilling with 143 holes totalling ~16,500m.
• Assay results received so far from 22 holes confirm “extensive, high-grade lithium mineralisation from surface … [including previously announced] … intersections of up to 3.02% Li₂O over 5 metres”.
• Geological assessment of the core is continuing “including detailed structural and geological logging, sampling and assay”.
• In addition to lithium, the drilling “has also identified tin and tantalum mineralisation within the same pegmatites”.
• The company also announces N$98m (~£4.4m) of loan funding has been approved by “two of Namibia’s most prominent financial institutions”, Bank Windhoek Limited (BWL) and the Development Bank of Namibia Limited (DBN).
• Proceeds will be used to construct and commission the ore sorting circuit at the Uis mine
• The 10-year facility, which will be delivered in two equal tranches of ~£2.2m each “complements the USD11 million (c. £8.1 million) equity raise … completed in April 2026”.
• CEO, Anthony Viljoen, commented that the “willingness … [of the two Namibian banks] … to commit long-term, low-cost development capital reflects the credible business we have built”.
• He also said that “the strong shareholder support shown in the April 2026 equity raise for concurrent growth initiatives, was partly the foundation that made this debt financing possible … [and that the resulting financial structure} … provides a fully funded platform to complete the ore-sorting circuit and to drive meaningful production growth at Uis Mine without further dilution”.

Conclusion: Expanded drilling programme completed at Lithium Ridge while Namibian banks provide long term loan facilities to the production growth plan at the Uis mine.

Elemental Royalty (ELE CN) C$24.5, Mkt cap C$1.6bn – Earn-in agreement formed with KGHM in Nevada

• Elemental Royalty Corp has entered an agreement with KGHM for four properties in Nevada.
• The agreement will see KGHM provide Elemental with execution payments, option payments and work commitments over a six year earn-in period for 100% interest.
• Elemental will retain a 2% NSR on the projects if KGHM earns 100% interest.
• KGHM will fund up to $5m in exploration expenditures over each of the four projects.
• The four projects include the following:
• Royston:
  • Tonopah, Nevada copper-gold-molybdenum porphyry target
  • Historic five hole RC programme confirmed anomalous base and precious metals under volcanic cover.
  • Two holes intercepted strong alteration with increasing mineralization at depth.
• Big E
  • Adjacent to Royston with outcropping porphyry dykes with strong alteration
  • Three-hole RC pr0gramme hit the edge of a potential porphyry copper system
• Tango
  • Historic IP survey showed chargeability anomalies warranting drill testing
  • Potential for skarn/replacement mineralization alongside porphyry target
• Whiskey
  • Shallower-level analogue to Tango porphyry target
  • Identified surface mineralization interpreted to project beneath volcanic cover
• Elemental management notes their focus on generating exploration opportunities at low-cost and notes their ‘ability to attract high-calibre partners’

KEFI Gold and Copper* (KEFI LN) 1.2p, Mkt Cap £164m – Operating and financial update

BUY – 4.2p

CLICK FOR PDF

• The Company released an operating and financial update on the Tulu Kapi Gold Project in Ethiopia yesterday.
• Operations update:
  • Onsite and offsite project workstreams are tracking on or ahead of the development schedule.
  • Construction of the 350 replacement houses for the local community commenced.
  • Project bulk earthworks to start once the first phase of resettlement is completed.
  • Order for SAG mill, the highest cost and longest lead item, placed.
  • Power lines (47km) connecting Tulu Kapi to the national grid under construction (government funded).
  • Two new access roads connecting the site to the bitumen highway under construction (government funded).
  • EPCM contract with Lycopodium finalised.
  • Commissioning targeted for late 2027 and full capacity mid-2028.
• Funding update:
  • $15m short-term working capital facility replaced with a longer-term source of capital including:
    • $10m in equity-ranking royalty with Cyprus-based Mithril Royalties (including Chancery Royalties $20m, total $30m royalty commitments’ terms include 2.4% on first 1moz produced, 1.6% thereafter, payments subordinated to debt, only payable alongside dividends paid to TKGM shareholders)
    • $5m in Ethiopian preference shares at the subsidiary level (same terms as the US$6m already agreed)
  • The $15m working capital facility will remain available on standby basis offering additional financial flexibility.
  • Senior debt drawdown ($240m) is expected in 3Q26.

Conclusion: The team is progressing with Tulu Kapi development activities including the start of replacement houses construction for resettlement programme, power lines and new access roads construction ongoing and SAG mill order placed. The team added $15m to the outstanding committed liquidity in the form of a royalty ($10m) and additional prefs ($5m). $15m working capital facility remains available for financial flexibility. We adjusted our valuation for additional royalty ($10m) and slightly increased KEFI effective interest (latest 86%, with the balance held by Ethiopian authorities) among main changes. Largely marginal adjustments, with risked NAV and TP little changed at ~$760m and 4.2p (10% DR, 0.75x P/NAV risk multiple, $4,000/oz gold price, ~86% att interest in TK). We reiterate BUY recommendation given cheap market valuation (currently trading at ~0.2x unrisked NAV) and a series of rerating catalysts ahead, including completion of relocation programme, first debt drawdown, start of bulk earthworks, plant commissioning, and maiden production.

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

Kendrick Resources (KEN LN) 8.75p, Mkt Cap £31m – Initial work shows depth continuity to Namibian rare-earths mineralisation as company moves towards an initial MRE

• Kendrick Resources has provided a summary of its internal review of the rare earths projects at Teufelskuppe (TK) and Kieshöhe (KH) in SW Namibia where it is earning a 70% interest under an agreement with the licence holder, Bonya Exploration.
• The company explains that its “Current tonnage estimate of 14Mt for TK for above ground mineralised carbonatite … [hosts] … an average head grade of 3.12 wt%” Light Rare Earth Oxides (LREO) including La2O3, CeO2, Nd2O3, Pr6O11, Sc2O3, Sm2O3, Eu2O3
• Chairman, Colin Bird, confirmed the intention “to produce a maiden resource by the end of the third quarter 2026 and to nail down an optimised metallurgical flow sheet” implying that the estimate above is not yet a formal resource.
• Today’s announcement explains that “Rare earth-bearing carbonatites shown to extend below the surface outcrops as evidenced by boreholes to 80-115m deep at targets TK1 and TK2”.
• Mr. Bird commented that “What has surprised our geologists and engineers is the tenor and continuity of rare earths that exist on both properties and rather than looking for independent small potential resources, we are looking at substantial potential resources on both projects”.
• Using “current TREO … [Total Rare Earth Oxide] … prices, capital costs for similar processing capability and mining and labour costs typical for southern Africa … [Kendrick Resources says that its] … Unaudited in-house gross project valuation (NPV) … [is] … US$ 400M for verified in situ LREO-bearing carbonatites at Teufelskuppe (TK) only”.

Conclusion: Kendrick Resources aims to produce an initial MRE for the Namibian rare-earths project in Q3 2026

Meridian Mining (MNO LN) 104p, Mkt cap £499m – DFS on track for 4Q26 as Installation License submitted

• Brazilian mine developer Meridian provides an update on its Cabaçal copper-gold VMS project in Brazil.
• Meridian reports today it has submitted the Installation Licence application for the project to the state environmental department.
• The IL is required to begin any mine-site construction.
• Following the submission, Meridian has begun ordering long-lead items, with pricing agreed for the SAG mill design.
• Civil surveying for key access routes and power infrastructure is nearing completion.
• The Operating Licence, which authorises commencement of operations, is scheduled for submission 2H28.
• The Cabaçal DFS remains on schedule for 4Q26, and is c.50% complete.
• The DFS will include an update mine plan following the updated resource estimate, while EPCM contract bidding is underway.
• The Cabaçal PFS results showed a base case post-tax NPV5 of US$984m and IRR of 61.2% using $2,119/oz Au, $4.16/lb Cu, $26.9/oz Ag.
• Project expected to produce 141koz AuEq over the first 10 years of operations, at an AISC of $742/oz AuEq.
• LOM initial CAPEX of US$248m, which includes expansion to 4.5mtpa throughput in year four.
• The Company is undertaking a feasibility study for Cabaçal and is working on a maiden MRE for Santa Helena.
• The current Cabaçal resource/reserves stand at:
  • M&I: 51.4mt at 0.55g/t Au, 0.4% Cu, 1.5g/t Ag for 904koz Au, 204kt Cu, 2.5moz Ag
  • Reserves: 41.7mt at 0.63g/t Au, 1.64g/t Ag, 0.44% Cu for 850koz Au, 2.2moz Ag, 405k Cu.
• The mine will be an open pit operation, with estimated strip ratio of 2.33 of LOM.
• Company will sell gold and silver in doré bars and a copper-gold concentrate.

Premier African Minerals (PREM LN) 0.02p, Mkt Cap £7.5m – Progress on commissioning the Zulu lithium plant, Zimbabwe

• During yesterday Premier African Minerals provided a progress report on its commissioning work at the Zulu lithium project in Zimbabwe.
• The company reaffirmed its intention to complete the current commissioning of the flotation plant during the current quarter and said that its team is “currently working on final planning with the Xinhai Technology … [which is supplying the plant] … commissioning and optimisation engineers in order to achieve this”.
• “Hot commissioning … [involving running ore] … from the crushing plant to the mill and to the mica flotation plant has now been successfully completed”.
• ‘Wet’ commissioning is continuing “across both the new and existing flotation plant, with water circulated continuously through the process circuits during extended operational testing in order to confirm plant flow rates and identify and rectify any potential problems”.
• The company says that “What remains is the hot commissioning of the new spodumene flotation plant and the production of saleable concentrate”.
• Premier African Minerals also confirms that “the mining contractor is ready to mobilise additional mining equipment in order to meet the anticipated ore feed demand requirements associated with planned plant operations”.
• In a separate announcement today, the company confirms that it has granted a total of 2.4bn options to directors and management bringing the total shares under option to ~2.5bn “equivalent to approximately 6.4 per cent of the Company’s current issued ordinary share capital”.
• The options include a total of 400m awarded to Executive Director, Graham Hill, exercisable at various dates up to 27^th May 2029 at prices between 0.0185p/share and 0.036p/share and options over a total of 320m shares exercisable over the same timetable and prices awarded to non-executive Chairman, Godfrey Manhambara.

Conclusion: Plant commissioning is progressing at the Zulu lithium project as the company maintains its Q2 2026 target date for completion.

Silvercorp Metals (SVM CN) C$12.5, Mkt cap C$2.9bn – Quarterly results supported by transition to shrinkage mining at Ying

• Chinese focused gold and silver producer Silvercorp reports 4QFY26 results.
• The Company sold 1.5moz Ag over the quarter, 2.6koz Au, 13.6mlb Pb and 3.9mlb Zn.
• Production from the Ying Mining district saw increased mining over the quarter supported by increased use of shrinkage mining.
• Cash costs fell to $78/t, down 8%qoq on ongoing mine mechanization and labour optimization.
• AISC reported at $17.35/oz AgEq.
• Revenue reported over the quarter stood at $147m, with adjusted EBITDA reported at $98m.
• EPS reported up 296%yoy to $0.27/share.
• Free cash flow reported at $57.9m.
• Company spent $75m in CAPEX in China and $49.4m in Ecuador as it advances the El Domo mine over the past 12 months.

Sovereign Metals* (SVML LN) 35p,  Mkt cap £220m – Monazite (REEs) confirmed across four pits at the Kasiya rutile and graphite project in Malawi

• Sovereign Metals report the confirmation of monazite across four planned pits at the Kasiya rutile and graphite project in Malawi.
• Monazite is a mineral which hosts phosphate and rare earth elements and normally occurs as a result of erosion of granitic and metamorphic rocks.
• The mineral also contains uranium and thorium.
• Monazite concentrate recovered at Kasiya is shown to contain Dysprosium (Dy), Terbium (Tb) and Yttrium.
• We expect the Sovereign team to make minor modification to the process circuit to start recovery of monazite in year 1.
• Management report the DyTb and Yttrium oxide ratios in the Total Rare Earth Oxide (TREO) basket are around 7 times higher than seen at the world’s five largest rare earth producers.
  • 2.5% DyTb and 11.8% Yttrium average within TREO ‘Total Rare Earth Oxide’ basket
    • vs. 0.4% DyTb and 1.7% Yttrium across the five largest REE miners
  • Up to 3.1% DyTb and 17.2% Yttrium seen in near-surface (0-6m)
  • 20.9% NdPr average
• Sovereign commissioned an independent expert report which shows potential pricing of US$16,000 – 19,000/t for the Kasiya monazite in the West due to its DyTb and Yttrium content.
• The spot price for monazite was US$6,142/t in April according to Shanghai Metals Market benchmark spot monazite price (min 54-55% TREO grade) for an identical TREO as these latest results.
• Dy and Tb are particularly important for high-temperature permanent magnets used in Windfarms and in advanced defence systems, precision guidance and aerospace.
• These REEs are critical additives for Neodymium-Iron-Boron permanent magnets where replacing a fraction of the Nd in the crystal structure with Dy and Tb drastically improve a motor’s coercivity and Curie temperature. This enables the electric drivetrain to operate at high speeds and temperatures 150°C-200°C without losing power or demagnetizing.
• Chinese export controls on REEs and in particular Dy and Tb are a major problem for the West with China controlling ~95% of total Dy and Tb output.
• The US recently underpinned a 15-year floor pricing contract for REEs with the Serra Verde in Brazil for ~US$2.8bn.
• The price floors are:
  • Nd – US$110/kg
  • Pr – US$110/kg
  • Dy – US$575/kg
  • Tb – US$2,050/kg

We believe the price of REEs is higher than the Serra Verde price floors in the US

• The Serra Verde mine also secured a US$565m mine development finance package from the US DFC
• Energy Fuels Inc. also acquired Base Resources for US$240m and Strategic Materials Limited for US$299m for their monazite production profiles.
• The team continue to work on optimising the separation of the monazite from the rutile and graphite streams.
• This is a very simply process using spirals and magnetic separators.
• Ideally, uranium and thorium grades will be reduced through the separation process.
• Management are also working out the economic value of the new monazite stream within the recently published DFS.

Conclusion: The recovery of monazite could add ~$60mpa to EBITDA with relatively little additional operating cost.

While the recovery of the Monazite adds to the strategic nature of the Kasiya project it will add materially to the project value.

*SP Angel acts as Nomad and broker to Sovereign Metals

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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

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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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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.

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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

SP Angel Corporate Finance LLP is authorised and regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange.

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