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10:50 Wed 26 Oct 2022
SP Angel . Morning View . Wednesday 26 10 22Copper prices climb towards monthly highs on weaker dollarMiFID II exempt information – see disclaimer below Zambia copper exploration opportunityWe are looking for investment into a private copper explorer with four highly prospective licences in Zambia, near major mines or significant exploration targets.
SP Angel . Morning View . Wednesday 26 10 22
Copper prices climb towards monthly highs on weaker dollar
MiFID II exempt information – see disclaimer below
Zambia copper exploration opportunity
Adriatic Metals PLC (LSE:ADT1, ASX:ADT, OTCQX:ADMLF)* – Positive step-out drilling results at Rupice
Bushveld Minerals Limited (AIM:BMN, OTC:BSHVF)* – Management call reiterates positive margins at current price levels
Condor Gold PLC (AIM:CNR, TSX:COG, OTC:CNDGF)* – Publication of the La India open-pit mine feasibility study
First Quantum Minerals (TSX:FQM) – $1.25bn Kansanshi expansion approved
Shanta Gold Limited (AIM:SHG, OTC:SAAGF) – FY22 production/cost guidance maintained with Singida on time/budget for first production Mar/23
Sovereign Metals Ltd (ASX:SVM, AIM:SVML) – Aircore drilling hits extends depth of mineralisation at Kasiya, Malawi
Gold climbs on welcome relief from weaker US Dollar and Treasury yields
Copper – US$ 7,586/t – Expect copper prices to rise from December into the new year as potential for physical shortages gains
Copper prices climb towards monthly highs on weaker dollar, despite soaring inventories
Tin inventories slide following year-long jump that cratered prices
Dow Jones Industrials +1.07% at 31,837
Nikkei 225 +0.67% at 27,432
HK Hang Seng +0.77% at 15,282
Shanghai Composite +0.78% at 3,000
Economics
US – Consumer sentiment came in lower than expected as inflation and interest rate hikes weigh on confidence.
China – Wuhan district orders 900,000 residents to stay at home from today on new Covid cases (Bloomberg).
Chinese steel giant’s gloomy outlook points to country’s dire industrial situation
Report indicates Chinese state banks have been ordered to buy equities to contain selling
Canada – The central bank is set to deliver a sixth consecutive rate hike today with markets pricing in a 75bp move.
Lithium – High prices for lithium precursors are seeing Chinese producers seeing switching from ceramics production to lithium slug processing, Benchmark Minerals writes.
Chilean government presents revamped royalty bill to Senate in bid to raise taxes
Gabon looks to fund hydro-power plant expansion with Africa’s largest sovereign green bond
Currencies
US$0.9984/eur vs 0.9861/eur yesterday. Yen 147.57/$ vs 148.94/$. SAr 18.140/$ vs 18.470/$. $1.150/gbp vs $1.129/gbp. 0.644/aud vs 0.633/aud. CNY 7.264/$ vs 7.306/$.
Dollar Index 110.73 / -2.00% on week
Commodity News
Precious metals:
Gold US$1,665/oz vs US$1,649/oz yesterday
Gold ETFs 95.4moz vs US$95.5moz yesterday
Platinum US$927/oz vs US$923/oz yesterday
Palladium US$1,957/oz vs US$1,993/oz yesterday
Silver US$19.55/oz vs US$19.20/oz yesterday
Rhodium US$14,100/oz vs US$14,100/oz yesterday
Base metals:
Copper US$ 7,586/t vs US$7,523/t yesterday
Aluminium US$ 2,268/t vs US$2,176/t yesterday
Nickel US$ 22,350/t vs US$21,960/t yesterday
Zinc US$ 2,916/t vs US$2,950/t yesterday
Lead US$ 1,888/t vs US$1,881/t yesterday
Tin US$ 18,580/t vs US$18,340/t yesterday
Energy:
Oil US$92.2/bbl vs US$93.1/bbl yesterday
Natural Gas US$5.684/mmbtu vs US$5.173/mmbtu yesterday
Uranium UXC US$53.35/lb vs US$53.35/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$88.2/t vs US$90.5/t
Chinese steel rebar 25mm US$542.1/t vs US$541.3/t
Thermal coal (1st year forward cif ARA) US$270.0/t vs US$270.0/t
Thermal coal swap Australia FOB US$384.0/t vs US$383.0/t
Coking coal swap Australia FOB US$313.0/t vs US$311.0/t
Other:
Cobalt LME 3m US$51,955/t vs US$51,955/t
NdPr Rare Earth Oxide (China) US$92,645/t vs US$91,377/t
Lithium carbonate 99% (China) US$75,425/t vs US$73,991/t
China Spodumene Li2O 5%min CIF US$5,900/t vs US$5,800/t
Ferro-Manganese European Mn78% min US$1,234/t vs US$1,218/t
China Tungsten APT 88.5% FOB US$32.0/kg vs US$32.0/kg
China Graphite Flake -194 FOB US$860/t vs US$860/t
Europe Vanadium Pentoxide 98% 7.4/lb vs US$7.4/lb
Europe Ferro-Vanadium 80% 30.65/kg vs US$30.65/kg
China Ilmenite Concentrate TiO2 US$309/t vs US$307/t
Spot CO2 Emissions EUA Price US$73.4/t vs US$67.9/t
Brazil Potash CFR Granular Spot US$620.0/t vs US$620.0/t
Company News
Adriatic Metals PLC (LSE:ADT1, ASX:ADT, OTCQX:ADMLF)* 129p, Mkt cap £334m – Positive step-out drilling results at Rupice
*An SP Angel mining analyst has visited Adriatic Metals operations in Bosnia
Bushveld Minerals Limited (AIM:BMN, OTC:BSHVF)* – 4.64p, Mkt cap £58m – Management call reiterates positive margins at current price levels
Valuation 23p
Conclusion: Bushveld management are working toward the production of 5,000-5,400mtVpa next year. The team have also worked out a route to 8,000mtVpa in a previously published four stage plan.
Rising production alongside the long-awaited collapse of the South African rand is offsetting rising power and material costs while rising vanadium prices in the US and China offer the prospect for stronger earnings to come.
(Dec year end) US$ 2019 2020 2021 2022E 2023E 2024E
Vanadium price $/kg 55 25 37.6 40 38 40
Vanadium Production mtV 1,859 2,685 3,592 3,942 5,082 5,194
Vanadium Sales mtV 2,392 3,842 3,314 3,942 5,260 5,194
Sales+ $m 116.5 90.0 106.9 161.0 204.1 212.1
Cost of Sales $m -45.8 -73.4 -83.4 -108.5 -129.2 -131.6
Admin costs $m -38.1 -31.5 -20.9 -18.4 -17.7 -17.8
Other costs $m -4.2 -5.5 -12.5 -15.7 -20.6 -20.8
Depreciation $m -10.4 -17.9 -19.4 -18.5 -20.0 -20.0
Operating profit $m 22.3 -32.8 -29.3 15.5 37.2 42.7
Finance & other $m 1.9 -4.7 -11.3 -10.7 -9.9 -5.4
Pre-tax profit $m 83.3 -37.5 -46.8 4.7 27.3 37.3
Tax $m -14.0 0.5 4.7 -1.9 -1.9 -4.7
Post-tax profit $m 69.2 -37.0 -42.1 2.9 25.4 32.6
EPS $c/s 5.51 -4.22 -0.66 0.55 1.10
PE x 6.4 – – – 8.4 4.2
EV/EBITDA x 13.6 – – 4.4 2.6 2.3
EBITDA $m 28.4 -20.4 -7.5 18.3 36.6 42.0
Source: SP Angel, Bushveld, Vametco & Vanchem
*SP Angel act as nomad and broker to Bushveld
Condor Gold PLC (AIM:CNR, TSX:COG, OTC:CNDGF)* 24.5p, Mkt Cap £40.9m – Publication of the La India open-pit mine feasibility study
Conclusion: We welcome the opportunity to gain an improved insight into the La India open-pit mine development which, given Condor Gold’s phased development approach, should provide a solid economic and technical base for the wider development of the satellite open-pits and the longer-term underground mining opportunities within the La India district where continuing exploration may be expected to add to the development pipeline.
*SP Angel act as a broker to Condor Gold
First Quantum Minerals (TSX:FQM) C$25, Mkt cap C$17bn – $1.25bn Kansanshi expansion approved
Shanta Gold Limited (AIM:SHG, OTC:SAAGF) 12.1p, Mkt Cap £127m – FY22 production/cost guidance maintained with Singida on time/budget for first production Mar/23
Sovereign Metals Ltd (ASX:SVM, AIM:SVML) 21.5p, Mkt Cap £101m – Aircore drilling hits extends depth of mineralisation at Kasiya, Malawi
Conclusion: The completion of the deeper aircore drilling at Kasiya shows depth extensions to the rutile mineralisation which, when all the drilling results have been received and incorporated into resource estimates seem likely to expand and possibly upgrade the existing indicated and inferred estimate of approximately 1.8bn tonnes at an average grade of 1.01% rutile and 1.32% graphite.
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
Joe Rowbottom – Joe.Rowbottom@spangel.co.uk – 0203 470 0486
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 – 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 of less than 15%
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