SP Angel Morning View -Today’s Market View, Monday 20th January 2025

China steelmakers plan further production cuts on weak demand

MiFID II exempt information – see disclaimer below

Amarc Resources (AHR CN) – Drill results from Joy Project, British Columbia

Botswana Diamonds (BOD LN) – Application for additional exploration licences in Botswana

Capital Ltd (CAPD LN) – Update following Reko Diq contract expansion

Kenmare Resources (KMR LN) – Q4 production results as capital investment continues

Kodal Minerals* (KOD LN) – Power generation installed and operational at Bougouni lithium plant in southern Mali

New Frontier Minerals (formerly Castillo Copper) (NFM LN) – Airborne geophysical survey underway at in the Harts Range project

Predictive Discovery* (PDI AU) – ESIA approval for Bankan Gold Project

Premier African Minerals (PREM LN) – Confirmation of Zulu lithium offtake agreement

Strategic Minerals* (SML LN) – Record Q4 2024 quarterly sales from Cobre deliver highest annual total since 2017

Tertiary Minerals* (TYM LN) – Mushima North drill results highlight silver potential in Zambia

China steelmakers plan further production cuts on weak demand

• China steelmakers have been slowing production since peak levels reached in 2020.
• Bloomberg reports China steelmakers suffered weakest free cash flow levels in 3Q24 since 2015.
• Meanwhile debt-to-asset ratios at highest since 2017.
• Analysts expect further production cuts in 2025, as mills realign to lower demand from the property sector.
• Iron ore has been supported by restocking in advance of the Lunar New Year, whilst supply continues to flow from Pilbara and Simandou expected to come online this year.

China lithium production slows amid January maintenance period

• Mysteel reports China lithium carbonate production fell 4.7% last week.
• Total carbonate inventories down 1.1% as cathode makers boost purchases for high-quality carbonate.
• Lithium ore inventories have now fallen from 90kt to 45kt in domestic warehouses, according to Mysteel.
• Commentators report China refiners are boosting purchases of higher-grade spodumene ore vs the likes of lepidolite.
• Shanghai Metals Market reports Albemarle completed an SC6 auction last week for $921/t vs the Platts assessment of $855/t.

Economics

US markets are closed for Martin Luther King Day today –

• The Trump inauguration is not technically a holiday except for Federal employees in the Washington DC area and that’s only to reduce the traffic.

• US – Trump / Xi pre-inauguration talks described as ‘very good’.
• Trump has an ability to U-turn like no other politician.
• We expect increases in some selective tariffs on Chinese EVs etc… because Trump promised tariffs but:
• Trump is a Deal-Junkie and we suspect all tariffs will be up for negotiation
• The US dollar has weakened, we suspect traders are reflecting the positive sounds coming out of the pre-inauguration
• The Fed is concerned Inflation may remain higher than target, partially driven by the ‘Trump effect’, which appears to be diametrically opposite to the ‘Starmer effect’.
• So far it talking-up the economy looks better than talking-it-down.

Metals continue to trade cautiously with few funds daring to go long ahead of Trump’s inauguration speech

• If anything the few funds that have gone long may be trimming their positions with little clear direction in the market.
• Concerns over the state of China’s finances, Europe and Russia remain.
• Manufacturers are taking a more cautious approach with so much uncertainty around.
• CRU estimate copper demand for datacenters to rise to around 250,000t this year and 530,000t by 2029
• They also see aluminium demand for datacentres to rise to 60,000t in 2025 an 180,000t by 2029

Australia – Port Hedland and other west coast Australian ports remain closed due to tropical cyclone 11U which is expected to develop into Category 3 today

Currencies

US$1.0311/eur vs 1.0296/eur previous. Yen 156.05/$ vs 155.62/$. SAr 18.673/$ vs 18.741/$. $1.220/gbp vs $1.219/gbp. 0.621/aud vs 0.621/aud. CNY 7.313/$ vs 7.328/$

Dollar Index 109.07 vs 109.08previous

Precious Metals

Gold US$2,707/oz vs US$2,710/oz previous

Gold ETFs 83.3moz vs 83.3moz previous

Platinum US$965/oz vs US$942/oz previous

Palladium US$964/oz vs US$944/oz previous

Silver US$31.2/oz vs US$30.6/oz previous

Rhodium US$4,650/oz vs US$4,650/oz previous

Base metals:   

Copper US$9,178/t vs US$9,286/t previous

Aluminium US$2,676/t vs US$2,673/t previous

Nickel US$15,876/t vs US$15,950/t previous

Zinc US$2,943/t vs US$2,927/t previous

Lead US$1,977/t vs US$1,979/t previous

Tin US$29,775/t vs US$29,715/t previous

Energy:           

Oil US$80.5/bbl vs US$81.7/bbl previous

• Crude oil prices are stable ahead of today’s US market closure for Martin Luther King Day, though we look for any policy indications from President-elect Donald Trump’s inauguration later today.
• The US Baker Hughes rig count was down 4 to 580 units last week (-40 or 6% y/y), with oil rigs down 2 at 478 units (-19 y/y) and gas rigs down 2 to 98 units (-22 y/y), as the Williston Basin lost 4 rigs to 33 units (-1 y/y).
• SLB announced double-digit revenue and EBITDA growth, margin expansion and $4bn of free cash flow in FY24, driven by record activity in the Middle East & Asia and the acquired Aker subsea business. The Company expects that upstream investment growth will remain subdued in the short term due to global oversupply.

Natural Gas €46.5/MWh vs €46.1/MWh previous

Uranium Futures $73.8/lb vs $73.9/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$101.2/t vs US$103.8/t previous

Chinese steel rebar 25mm US$482.3/t vs US$482.3/t

HCC FOB Australia US$195.5/t vs US$193.7/t

Thermal coal swap Australia FOB US$115.3/t vs US$113.3/t

Other:  

Cobalt LME 3m US$24,300/t vs US$24,300/t

NdPr Rare Earth Oxide (China) US$55,946/t vs US$55,786/t

Lithium carbonate 99% (China) US$10,029/t vs US$10,025/t

China Spodumene Li2O 6%min CIF US$800/t vs US$795/t

Ferro-Manganese European Mn78% min US$1,005/t vs US$1,005/t

China Tungsten APT 88.5% FOB US$338/mtu vs US$338/mtu

China Graphite Flake -194 FOB US$435/t vs US$435/t

Europe Vanadium Pentoxide 98% US$4.6/lb vs US$4.6/lb

Europe Ferro-Vanadium 80% US$25.3/kg vs US$25.3/kg

China Ilmenite Concentrate TiO2 US$293/t vs US$290/t

China Rutile Concentrate 95% TiO2 US$1,071/t vs US$1,071/t

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

Brazil Potash CFR Granular Spot US$300.0/t vs US$300.0/t

Germanium China 99.99% US$2,725.0/kg vs US$2,725.0/kg

China Gallium 99.99% US$385.0/kg vs US$385.0/kg

Battery News

China’s 2024 installed battery capacity reaches 550GWh

• In 2024, China’s cumulative installed battery capacity was 548.4GWh, up 41.5% yoy.
• Ternary batteries accounted for 25.3% of the total with 139GWh installed, up 10.2% yoy.
• Lithium iron phosphate (LFP) batteries accounted for 74.6% of the total with 409GWh installed, a yoy increase of 56.7%.
• CATL and BYD dominated the market again, with CATL holding a 43% share and BYD’s share increasing to 25% (from 15% in 2020).

Samsung solid-state set for production

• The head of Samsung Electro-Mechanics has confirmed that the companies plans for solid-state batteries is running to schedule and expects the first batteries to be produced this year.
• He also claimed that the battery has achieved the highest energy density in the industry, without going into specifics.
• Samsung’s solid-state battery technology is oxide based and the small cells can go into its wearable electronics.
• The company touted 2027 for when the batteries could go into EVs.

China renews subsidised auto trade-ins for 2025

• China’s commerce ministry has kicked off subsidised auto trade-ins, a program likened to the US “cash-for-clunkers” stimulus.
• The auto trade-in subsidies were announced earlier this month as part of the expanded consumer trade-in scheme to revive economic growth.
• Consumers who scrap old vehicles will be entitled to $2730 when purchasing an NEV.
• The subsidy amount is the same as the policy released in July 2024, but the latest policy expands the range of old vehicles that qualify for the scheme.

Company News

Amarc Resources (AHR CN) C$0.72, Mkt Cap C$159m – Drill results from Joy Project, British Columbia

• Amarc Resources, an exploration company backed by the Hunter Dickinson Group, reports drill results from their Joy Project in BC, Canada.
• The project is in JV with Freeport McMoran, who are earning up to 70% of the JOY district, earning a 70% interest through staged investments of C$110m.
• The Company reported drilling results on Friday, with highlights including:
  • JP24057 : 82m at 1.24g/t Au, 0.38% Cu from 18m and 70m at 2.56g/t Au and 0.42% Cu
  • JP24059: 271m at 0.98g/t Au, 0.25% from 24m
  • JP24071: 212m at 1.36g/t Au, 0.4% Cu from 21m
  • JP24074: 162m at 2.19g/t Au, 0.63% Cu from 69m
  • JP24076: 141m at 0.73g/t Au, 0.18% Cu from 57m
  • KP24082: 147m at 0.34g/t Au, 0.22% Cu from 131m
• Hole,57 intersected a new porphyry Cu-Au-Ag system, causing Freeport and Amarc to step out, with the six other holes drilled at 100m intervals on east-west sections.
• Drilling has established a 600m wide zone of porphyry mineralisation from near surface.
• The exploration team notes lateral and vertical continuity, remaining open laterally.
• Assay results from a further six holes, drilled along the east-west section n a 100m step out to the north are near completion, reportedly showing ‘similar very encouraging grades and characteristics to those reported in this release.’
• Today’s results sit over the Joy Northwest Gossan Target area, within a wider 15km mineralised trend.
• Company notes that ‘much of the NWG target area remains unexplored.’

Conclusion: This is an exciting development from the Amarc team, who drilled 40 holes over 16,883m at Joy in 2024. Friday’s results are the first of these and highlight the discovery potential at the Project. Freeport continues to support the Company with financing on a project-level and we look forward to results from the next six holes due imminently, which should go some length to highlight the potential scale of the deposit.

Botswana Diamonds (BOD LN) 0.17p, Mkt Cap £1.9m – Application for additional exploration licences in Botswana

1. Botswana Diamonds reports that it has applied for three additional Prospecting Licences close to its KX36 kimberlite pipe which contains an indicated resource of 17.9Mt of 35 carats per hundred tonnes (“cpht”) and an additional ‘Inferred’ resource of 6.7Mt at 36 cpht.
2. The application follows the announcement, in December, that using artificial intelligence techniques the company had identified seven new targets close to KX36.
3. The application “covers areas

1. • North West of Mahalapye in the Serowe area;
   • South West of Jwaneng close to the South African border; and
   • North East of Lerala in eastern Botswana”.

1. Among the areas covered in the application is an “anomaly, located South-West of Debswana’s Jwaneng Mine … [which] … suggests more than one potential kimberlite” and is “the highest ranked anomaly in the analysis”.
2. Chairman, John Teeling, explained that “Kimberlites are difficult and very expensive to find. Less than 8,000 have ever been discovered worldwide. To find seven potential kimberlites in a few months is an impressive accomplishment for the Company”.
3. Managing Director, James Cambell, said that he was looking forward to taking “these exciting targets to the next stage” with follow up field exploration.

Conclusion: We look forward to results of field exploration from the new target areas in Botswana.

Capital Ltd (CAPD LN) 315p, Mkt Cap £281m– Update following Reko Diq contract expansion

• Drilling Company Capital reports an operational update for the quarter to 31^st December 2024.
• The Company has received a Letter of Intent from Barrick to boost service offerings at Reko Diq.
• The contract is expected to cover a three year term focused on construction of the project.
• Capital will also work on a tailings storage facility contract.
• Company generated $348m in 2024 vs guidance of $355-375m.
• Drilling revenue grew 11%yoy, impacted by delays at Nevada Gold Mines.
• Company signed contracts over the quarter with KoBold for Mingomba, Perseus at Yaoure, Aton Mining in Egypt and Lotus Gold in Egypt.
• 2025 CAPEX guided at $45-55m vs $70-80m guided for 2024.

Kenmare Resources (KMR LN) 315p, Mkt Cap £281m– Q4 production results as capital investment continues

• Mineral sands producer Kenmare reports results from the full year 2024 and quarter to 31^st December.
• Company produced 1,089kt of product including 1,009kt ilmenite, 50.5kt zircon and 9.8kt rutile, an increase of 4%yoy.
• Increase reflects stronger throughput and grades but offset by higher slimes at WCP A.
• Company met guidance for 2024 ilmenite production.
• 2025 guidance
  • 930-1,050kt ilmenite
  • 47.554kt zircon
  • 9-10kt rutile
  • 63-69kt concentrates
  • Cash cost per tonne at $206-228.
  • CAPEX of $155m, with $150m for WCP A, vs $128m guided previously after deferring 2024 spend.
  • Total WCP A CAPEX estimated at $341m.
  • SUSEX guided at $38m.
• Company notes ‘consistently strong customer demand’  through 2024.
• WCP A upgrade continues on budget, with 75% of CAPEX now committed, with commissioning expected 3Q25.
• New TSF construction delayed by permitting complications associated with Mozambique election.
• Cash position at year end of US$56.9m , with interest-bearing debt of $80.4m vs $49m last year.
• Kenmare reports record higher demand for titanium feedstocks offset by growing supply of HMC from Mozambique, Sierra Leone and Indonesia.

Kodal Minerals* (KOD LN) 0.44p, Mkt Cap £89m – Power generation installed and operational at Bougouni lithium plant in southern Mali

(Hainan Mining holds a 51% stake in KMUK which holds the Bougouni Lithium Project in Mali with Kodal holding 49%. Mali will hold 35% of the jv company with KMUK)

(Kodal Minerals Plc now, effectively, hold 49% of 65% of the Bougouni project with Mali holding 35% through LMLB and 65% of LMLB held by the Kodal jv with Hainan Mining within KMUK)

• Kodal Minerals reports the installation of the power generation plant for the Bougouni lithium mine and process plant in Mali.
• Stage 1: DMS commissioning is due to start within weeks.
• Construction and commissioning of the DMS processing plant at the Ngoualana mine is ongoing with >150,000t of ore mined grading 1.17% Li2O.
• First production of Spodumene concentrate from the DMS plant is expected in Q1

• Offtake: We await further news on the offtake agreement to be signed between Hainan Mining and KMUK where Hainan holds 51%.

• • “The offtake agreement being negotiated between KMUK and Hainan will be based on market prices for spodumene, with a floor set to ensure that all costs are covered.
  • Any offtake agreement requires written approval from Kodal Minerals PLC
  • Offtake for Stage 2 production is outside of the scope of current negotiations with Hainan and remains available to KMUK for future commercial opportunities.”
• Key terms:
  • 35% of the mining project will be transferred to the Mali government and will be held in the LMLB jv company made up of:
    • 10% free carry. This is a long-standing item in Mali,
    • 25% of new equity for ~US$4.3 million,
    • The 35% equity interest cannot be diluted below 35% in the event of any capital increases in LMLB,
    • KMUK partners are able to recover all capital investment and intercompany loans from the operation as a priority.
  • 65% of LMLB will be held by the Kodal jv with Hainan Mining within KMUK.
  • 10-year term for the mining license with renewal likely but subject to conditions in the mining code.
  • Customs and duties exemptions during construction continue including the temporary admission of vehicles, machinery and other property under the regime and in the mining list.
    • Including all tools, oils and greases for machines necessary for their activities, petroleum products, spare parts, materials and equipment, machinery and appliances.
  • LMLB will have at least four directors representing Mali including two independent directors.
  • US$15m cash payment to the government of Mali relating to the Hainan Transaction with US$7.5m paid and a second US$7.5m due by 31 March 2025.
  • “Upon completion of transfer of the mining licence the MoU confirms that the Bougouni mining licence will be in full compliance with all legal requirements and in good standing.”
• License:  The Malian government has signed a binding MoU with KMUK so that the Bougouni mine and associated licenses can move to the new Mali 2023 Mining Code.

*SP Angel acts as financial advisor and broker to Kodal Minerals.

New Frontier Minerals (formerly Castillo Copper) (NFM LN) 0.85p, Mkt Cap £12m – Airborne geophysical survey underway at in the Harts Range project

• New Frontier Minerals – formerly Castillo Copper, reports that a helicopter based radiometric and magnetic geophysical survey has started at its Harts Range project northeast of Alice Springs in the Northern Territory, Australia.
• The survey “aims to expedite exploration over untested areas, identify additional targets and explore extensions of known Uranium, Niobium, and Heavy Rare Earths mineralisation” and help “the geology team to delineate and prioritise drilling targets”.
• Describing the survey as “part of an overall methodical and systematic exploration campaign”, Chairman, Ged Hall, explained that “it will deepen our knowledge of the underlying structures to better define and delineated targets for drill-testing for Uranium, Niobium and Heavy Rare Earths mineralisation”.
• The survey is expected to be completed in January and interpretation of the data should be available during February helping to define drill targets and support follow up exploration including “regional rock chip sampling, mapping and fieldwork”.

Conclusion: The start of a helicopter based geophysical survey at Harts Range will aid in future exploration planning and the identification of targets for future drilling We await the results and news of the company’s plans with interest.

Predictive Discovery* (PDI AU) A$0.27, Mkt Cap A$641m – ESIA approval for Bankan Gold Project

• Australian gold developer Predictive reports the receipt of the Environmental Impact Assessment for their Bankan Project in Cote D’Ivoire.
• The ESIA is a necessary environmental certificate required before application for the Exploitation Licence.
• Company states that it is a ‘signfiicant de-risking step as it confirms the MEDD’s support for the development of the Bankan Project in the Peripheral Zone of the Upper Niger National Park.’
• PDI will relinquish a portion of the Bankan permits within the Buffer Zone of the Park.
• The Company will submit their Exploitation Permit by 31^st January.
• Predictive continues to drill at Fouwagbe and Sounson, expected to report a maiden MRE during 1Q25.
• DFS expected in 2H25.

*An SP Angel analyst holds shares in Predictive Discovery

Premier African Minerals (PREM LN) 0.03p, Mkt Cap £10m – Confirmation of Zulu lithium offtake agreement

• Premier African Minerals reports that Canmax Technologies has confirmed that it will “work in alignment with Premier to ensure the completion of the commissioning and optimisation of both the primary flotation plant and secondary flotation plant to achieve the targeted grade and recovery at the Zulu Lithium and Tantalum Project” in Zimbabwe.
• Canmax have also confirmed “that the basis of their prepayment under the … [August 2023 Offtake and Prepayment Agreement] … is unchanged and remains for the delivery of SC6 and not the ownership and/or management of Zulu”.
• CEO, George Roach, expressed confidence that the company “will complete the optimisation and final commissioning of the spodumene float circuit at Zulu … [and that] … extensive additional test work completed in the latter part of 2024 and the purchase of additional float cells to be installed at Zulu will support this”.
• He added his view that “the objectives of Premier and Canmax are aligned with the sole intention of meeting delivery of product and liquidation of the prepayment, without which Zulu could not have been built”.

Strategic Minerals* (SML LN) 0.25p, Mkt Cap £4.8m – Record Q4 2024 quarterly sales from Cobre deliver highest annual total since 2017

• Strategic Minerals reports that Q4 sales from its Cobre magnetite operation in New Mexico were a record of 19,952 tonnes bringing 2024 sales of 70,658tonnes to the highest since the 70,658 tonnes sold in 2017.
• Final quarter sales revenues of US$1.33m (Q4 2023 – US$0.39m) bring the total for the year to US$4.7m (2023 – US$1.5m) exceeding the company’s guidance.
• The company reports a 31st December 2024 cash balance of US$0.62m.
• Today’s announcement also clarifies that during H2 2024, Strategic Minerals “also cleared US$0.49m of liabilities, attributable to working capital loans & interest (US$0.10m), former Director & Management fees (US$0.10m) and Director & Management fees (US$0.24m). This is a significant achievement and leaves the with a clear path to continue to rationalise the portfolio and increase the focus on CRL … [Cornwall Resources Limited, which is exploring the Redmoor area in the UK] … and critical minerals exploration and development”.
• Commenting on CRL, the announcement says that “relogging and sampling of its existing diamond drill core, and other exploration and project activities … [at the Redmoor tin/tungsten/copper project] … in order to further define drill holes targets … [is] … expected to lead to both an updated geological model and ultimately a revised new mineral resource”.
• The current estimate for Redmoor, based on Strategic Minerals’ 2017/2018 drilling, is an ‘Inferred’ mineral resource of 11.7mt at an average grade of 0.56% tungsten trioxide, 0.16% tin and 0.50% copper.
• Thanking the “whole team for their dedication and determination in 2024”, Executive Director, Mark Burnett, reaffirmed Strategic Minerals’ “focus on critical minerals exploration and development at the Redmoor Tungsten-Tin-Copper Project”.

Conclusion: A strong Q4 and annual sales result from Cobre in 2024 supports the increasing focus on exploration at Redmoor.  We look forward to the revised MRE expected to result from re-evaluation of the existing data and results from exploration in the expanded area including the Duchy of Cornwall licence areas.

*SP Angel acts as Nomad and broker to Strategic Minerals

Tertiary Minerals* (TYM LN) 0.08p, Mkt Cap £2.9m – Mushima North drill results highlight silver potential in Zambia

• Tertiary provides drill results from Mushima North in Zambia.
• Four drill holes were submitted for lab checks, three of which targeted the A1 prospect.
• Highlights include:

• • 24TMN004: 59m at 25g/t Ag, 0.2% Cu, 0.16% Zn from 10m to end-of hole.
    • Included 26m at 36g/t Ag, 0.24% Cu and 0.15% Zn.
  • 24TMN024: 6m at 0.58% Cu, 0.08% Co from 47m
  • 24TMN016: narrow intervals of low-grade mineralisation.
• Company notes that the silver-in-soil geochemical anomaly associated with hole 24TMN004 extends over a 1.3km long trend and is open ended to the northeast and southwest.
• Tertiary will now assay further holes from Line 1 which are expected to also host silver.

Conclusion: This is an interesting development for Tertiary at Mushima North, with hole 24TMN004 returning wide intercepts of silver.  It is encouraging that hole 004 ended in mineralisation, and we look forward results from the samples submitted for repeat analysis.

*SP Angel acts as Nomad and Broker to Tertiary Minerals

LSE Group Starmine awards for 2024 commodity forecasting:

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

No.2 in Base Metals: SP Angel mining team awarded No 2. ranking for Base Metals forecasting in LSEG Annual Starmine Award for Reuters Polls 2024

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

Arthur Parish – Arthur.Parish@spangel.co.uk – 0203 470 0476

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 employees may have previously held, or currently hold, shares in the companies mentioned in this note.

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