SP Angel Morning View -Today’s Market View, Monday 27th January 2025

Gold climbs towards all-time-high as yields slide on DeepSeek concerns

MiFID II exempt information – see disclaimer below

Anglo American (AAL LN) – BHP backs off Anglo American pursuit, FT reports

Guardian Metal Resources (GMET LN) – Option agreement on tungsten prospect in Nevada

Power Metals Resources* (POW LN) – (Power Metals* holds a 45% stake in Guardian Metal Resources)

Orezone Gold (ORE CN) – Drill results from Bombore boost prospects for additional ounces at depth

Strategic Minerals* (SML LN) – Appointment of NED

Gold ($2,764/oz) recovers from Trump’s tariff fuelled sell-off as yields slide on DeepSeek concerns

• Gold prices tested record highs on Friday, climbing to $2,786/oz before sliding this morning.
• The move lower likely reflected reignited tariff concerns after Trump used Colombia as an example to other trading partners over his appetite for tariffs.
• The market has seen tariffs as a tailwind for the dollar, with the reversal in the dollar index mid-January reflecting cooling concerns over global tariffs.
• The dollar index has fallen from 110 to today’s 107.5.
• Gold prices benefit from a weaker dollar, especially considering Asian buyers had been a key tailwind for the metal in 2024.
• Lower US Treasury yields are also historically bullish for gold, with the 10 year sliding from 4.8% to today’s 4.53%.
• This move likely reflects tech buyers rotating into treasuries amid concerns over China’s DeepSeek damaging US tech valuations.
• We would expect a further leg down in US yields and a continued sell-off in the dollar to help push gold prices past record highs.

Nickel – nickel fell alongside copper, PGMs and aluminium.

• An uptick in the dollar on Trump’s tariff rhetoric to Colombia may also have played a role in the sell-off.
• China manufacturing PMIs came in at 49.1 vs expectations of 50.1.
• However, the PMI report showed growth in metal product, rail, shipping and aerospace industries.

Copper ($9,170/t) cools as China manufacturing activity contracts to August lows

• Copper prices sold off this morning alongside the wider metals complex.

Fresh buying of copper concentrates for China suggests the destocking cycle is ended

• Global copper inventories have been falling since we reported the end of the destocking cycle in China in August.
• LME inventory levels fell a further 1,800t this morning to 257,625t with global stocks falling to ~434,000t today from >600,000t in August
• Tc/Rcs have fallen to record lows as smelters compete for copper concentrates driven by uncertainty over Freeport Indonesia conc exports.
• Indonesia has since granted a concentrate export license to Freeport for Q1 eg. until it repairs the fire damage at its new smelter.
• Scrap material is also at low levels despite the China relaxing restrictions on the quality of scrap imports
• Premiums for physical copper are now 55-68/t in Shanghai and ~88/t on Comex.
• We expect China’s drive to strengthen its power networks to drive demand as it better connect regions where more variable wind and solar power create grid instability.
• Grid spending will continue to increase to meet the demands of higher-tech industries .
• The State Grid Corp. China’s largest grid utility plans >CNY650bn (US$89bn) this year after a CNY600bn ($83bn) budget in 2024.
• Chinese electrical power demand is expected to increase by 6.2% from ~9,500,000 GWh in 2024, making it the world’s largest electrical power consumer according to the IEA.
• With China and most other national power grids needing significant upgrade to avoid instability we feel demand for copper, aluminium and related grid metals with be hard to match.
• The incorporation of increasing power from wind and solar projects makes grid networks increasingly unstable threatening grid outages and even outright collapse under certain conditions.

Cobalt prices slide lower as China’s CMOC ramps up production guidance

• Cobalt prices have now fallen to $11/lb from c.$20/lb in early 2023.
• The metal continues to struggle with transitioning battery material technologies in EVs and oversupply in the market.
• This oversupply is primarily a result of China’s CMOC boosting production from their DRC operations.
• Bloomberg reports the Company provided 2025 output guidance of 100-120kt Co vs 2024 production of 114kt.

Uranium – Davos panellists highlight progress towards tripling nuclear capacity by 2050

• Davos hosted its first ever panel on nuclear energy last week
• Thirty countries have now pledged to triple nuclear capacity by 2050 representing the addition of ~30GWh/y for 20 years, starting in 2030 according to World Nuclear News.
• Major power consumers such as Microsoft and Google are working on plans for new nukes to provide stable, non-carbon power supplies for their datacentres.
• Trump has bolstered the Department of Energy and the US Nuclear Regulatory Commission to help the process.
• Sweden has a roadmap for two large-scale nuclear reactors by 2025 with another 10 by 2045
• China is adding another 29 reactors (33GWe) to the 58 (57GWe) it already operates with another 36 planned (39GW) according to the World Nuclear Association.
• India is adding another 7 (5.9 GW) to 23 operable reactors (7.4GW) with another 12 planned (8.4 GW).
• Japan is adding two (2.8GW) reactors more to the 33 operable reactors (31.7 GW) with one more nuke planned at 1.4 GW.
• South Korea is also adding two (2.7 GW) more to its fleet of 26 reactors (25.8 GW).
• While reactors often sign long-term uranium supply deals to ensure sufficient feedstock we have to wonder

Gold market comment (17/01/2025):     Podcast:  

Video:  

Economics

US – Manufacturing PMI rose to 50.1 from 49.4 – a new seven-month high helped by the Trump effect

• Services PMI fell to 52.8 from 56.8 marking a nine-month low
• Composite PMI fell to 52.4 from 55.4

China – Year of the Snake starts this week

• The Lunar new year festival is a big travel and shopping event for China and should provide indications of China’s move to greater consumption
• We look forward to news on Chinese incentives, eg. discounts and vouchers on EVs, white goods and high-tech products
• Greater consumption will help discussions between Xi and Trump and will help offset the impact of tariffs if Trump follows through with previous threats

China – Manufacturing PMI falling to 49.1 from 50.1it’s first contraction since October (NBS data)

• The fall reflects a slowdown into the Lunar new year
• Non-Manufacturing PMI dropping to 50.2 from 52.2 as the economy slows on Trump concerns

Currencies

US$1.0486/eur vs 1.0487/eur previous. Yen 155.13/$ vs 155.29/$. SAr 18.573/$ vs 18.335/$. $1.246/gbp vs $1.240/gbp. 0.629/aud vs 0.632/aud. CNY 7.261/$ vs 7.242/$

Dollar Index 107.518 vs 107.553 previous

Precious metals:         

Gold US$2,758/oz vs US$2,772/oz previous

Gold ETFs 83.1moz vs 83.4moz previous

Platinum US$941/oz vs US$959/oz previous

Palladium US$973/oz vs US$1,008/oz previous

Silver US$30.3/oz vs US$30.8/oz previous

Rhodium US$4,675/oz vs US$4,675/oz previous

Base metals:

Copper US$9,189/t vs US$9,345/t previous

Aluminium US$2,624/t vs US$2,655/t previous

Nickel US$15,715/t vs US$15,735/t previous

Zinc US$2,829/t vs US$2,893/t previous

Lead US$1,949/t vs US$1,970/t previous

Tin US$30,050/t vs US$30,150/t previous

Energy:

Oil US$78.5/bbl vs US$78.2/bbl previous

• The US Baker Hughes rig count was down 4 to 576 units last week (-45 or 7% y/y), with oil rigs down 6 to 472 units (-27 y/y) and gas rigs up 1 to 99 units (-20 y/y), as the Permian Basin lost 6 rigs to 298 units (-12 y/y).
• Media reports that Perenco plans to be active in the M&A market to maintain the Company’s production levels of 500kboe/d, which includes 130kb/d in Gabon, 100kb/d in Cameroon, 90kb/d in Congo-Brazzaville, 20kb/d in the Democratic Republic of Congo and 20kb/d combined in Chad and Tunisia.
• Eni Spa has begun producing sustainable aviation fuel (SAF) at the 0.4mtpa Gela Enlive biorefinery in Sicily, which has been converted to process up to 736,000 metric tons of biomass a year, mainly using waste and residual feedstocks such as cooking oil, animal fat and by-products from vegetable oil processing.

Natural Gas €48.6/MWh vs €49.7/MWh previous

Uranium Futures $71.2/lb vs $73.2/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$104.8/t vs US$104.9/t

Chinese steel rebar 25mm US$486.5/t vs US$488.0/t

HCC FOB Australia US$190.0/t vs US$191.0/t

Thermal coal swap Australia FOB US$117.0/t vs US$117.0/t

Other:  

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

NdPr Rare Earth Oxide (China) US$57,155/t vs US$57,297/t

Lithium carbonate 99% (China) US$10,123/t vs US$10,148/t

China Spodumene Li2O 6%min CIF US$815/t vs US$815/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$430/t vs US$430/t

Europe Vanadium Pentoxide 98% US$4.5/lb vs US$4.5/lb

Europe Ferro-Vanadium 80% US$24.6/kg vs US$24.6/kg

China Ilmenite Concentrate TiO2 US$295/t vs US$296/t

Global Rutile Spot Concentrate 95% TiO2 US$1,588/t vs US$1,588/t

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

Brazil Potash CFR Granular Spot US$305.0/t vs US$305.0/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

US sees EV sales surge as Trump delays ending federal rebates

• The US experienced a surge in EV sales in the final months of last year that could continue into 2025, as consumers continue to take advantage of federal tax incentives while they last.
• EV sales in the US were up 15% in Q4 of 2024.
• President Donald Trump had been vocal during his campaign about ending the Biden administration’s $7,500 tax credit on EVs.
• On the day of his inauguration, Trump signed an executive order titled “Unleashing American Energy”, which says the government is “considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favour EVs over other technologies.”
• The wording of the executive order, says the administration is still ‘considering’ its options, leaves room for ambiguity about the timing of its application.

India sees EV penetration reach 7.4% in 2024

• EV penetration in India rose to 7.4% 2024, up from less than 1% in 2019. (SBI Capital Markets)
• The report projected EVs to account for 30-35% of annual vehicle sales by 2030.
• Globally, EVs made up one in four vehicles sold in 2024, compared to one in 40 five years ago.
• Growth in India has been supported by incentives, including a 5% goods tax on EVs compared to 28% for ICE vehicles.
• Two- and three-wheelers have been at the forefront of growth due to the lower costs, smaller batteries and commercial use cases.

Mercedes-Benz could focus on super long-range batteries regardless of cost

• A partnership between Massachusetts-based Factorial and Mercedes-Benz to bring an all-solid-state battery to market with amazing performance is making progress. (Elektrek)
• The ‘Solstice’ battery packs can hit a 40Ah capacity.
• Elektrek and Reuters have reported that it will offer an 80% increase in energy density and range compared to current standards.
• Solstice is billed as providing a range of 500 to 600 miles or more, all according to the company.

 Company News

Anglo American (AAL LN) 2,387.5p, Mkt Cap £29bn – BHP backs off Anglo American pursuit, FT reports

• The FT reported over the weekend that BHP are reportedly putting a second run at Anglo American on ice.
• Anglo shares are down 6% this morning on the back of the news and weaker copper prices in Asian trading.
• The Company is currently selling down its coal, platinum and diamond businesses to streamline operations.
• The FT sites sources stating Anglo stock is too expensive to consider a fresh bid.
• BHP has since acquired a stake in the Vicuna district by purchasing Filo del Sol with Lundin Mining last summer.
• Additionally, BHP is investing heavenly in its south American assets to sustain production levels, particularly at Escondida.

Guardian Metal Resources (GMET LN) 35p, Mkt Cap £44m – Option agreement on tungsten prospect in Nevada

Power Metals Resources* (POW LN) 14p, Mkt cap £15m – (Power Metals* holds a 45% stake in Guardian Metal Resources)

• Guardian Metal Resources has signed the previously reported option agreement to acquire the former Tempiute tungsten mine located around 240km north of Las Vegas, Nevada and southeast of the company’s Pilot Mountain tungsten project.
• The company will pay the vendor, Hinkinite Resources, $50,000in cash plus 150,000 shares “within the coming days”.
• Within 3 years Guardian Metal Resources is required to “establish on the Property a ‘mineral resource’ of tungsten trioxide (WO₃) with a minimum cut off grade of 0.4% … [and pay an additional $1m for] … for a 31,000 ton (WO₃ metal) Maiden Resource, up to a maximum Bonus Payment of US$2,000,000” in order to acquire full ownership of the project.
• Hinkinite Resources will also receive a 1.5% NSR “from all mineral production from the Project” with Guardian Metal Resources retaining the right to purchase 50% of the NSR “for a one time payment of US$1,000,000”.
• In October 2024, the company confirmed that it had secured a 90-day option to acquire the property which had been“mined for tungsten, silver and zinc intermittently over the last century, most recently being in operation by United Carbide from 1977 to 1987”.
• Subsequent reports t confirmed the presence of tungsten-bearing skarn mineralisation.
• CEO, Oliver Friesen, said that the Tempiute property, “along with our Pilot Mountain tungsten project, represents a significant holding of U.S.-domiciled tungsten projects located in the mining friendly state of Nevada”.
• We have previously commented that our research on data from the USGS indicates that the Tempiute mine (also known as the Emerson mine) produced ~0.5m short tons of tungsten ore between 1938 and 1982 making it the 2nd largest producer of the 20 Nevada operations included in the USGS data.
• Mr Friesen also highlighted the strategic role of tungsten to the United States and the “‘Unleashing American Energy’ Executive Order signed by President Donald Trump … [which points] to the U.S. urgency to reshore its mined supply chains of critical metals including tungsten”

Conclusion: Securing an option to acquire a second tungsten project in Nevada reinforces Guardian Metals’ commitment to a commodity considered strategic in the US.  We await further information on the company’s plans to progress the project.

*SP Angel acts as Nomad and Broker for Power Metals

Orezone Gold (ORE CN) C$0.72, Mkt Cap C$333m – Drill results from Bombore boost prospects for additional ounces at depth

• West African gold producer Orezone reports drilling results from their Bombore mine in Burkina Faso.
• Drilling is intended to expand the current 5.1moz resource base, with the current 12 hole programme aiming to extend the North Zone Footwall.
• Highlights include:
  • BBD1324: 2.55 g/t Au over 23.00m, including 5.54 g/t Au over 5.00m from 193m
  • BBD1320: 1.14 g/t Au over 29.50m, including 2.30 g/t Au over 4.50m from 260m
  • BBD1323: 1.20 g/t Au over 23.80m from 364m
  • BBD1319: 1.01 g/t Au over 18.70m from 282m
  • BBD1318: 1.80 g/t Au over 15.00m from 254m
  • BBD1318: 1.59 g/t Au over 9.80m from 167m
  • BBD1322: 1.69 g/t Au over 6.85m from 409m
  • BBD1323: 24.74 g/t Au over 2.00m from 209m
• Company believes that drilling at North Zone Footwall has potential to ‘materially extend the North Zone Footwall resource and reserve pits to depth.’
• They also suggest that there are ‘comparable opportunities to extend the mineralized system at depth across the greater 14km long reserve defined trend.’
• Focus at the North Zone Hill is for potential underground mining zones, where historical drilling has shown high-grade potential down plunge.
• Management believes that this zone holds the ‘potential to transition into an underground mining scenario beneath the existing life of mine open pits.’

Strategic Minerals* (SML LN) 0.25p, Mkt Cap £5m – Appointment of NED

• Strategic Minerals reports the appointment of Mr. Philip Hayden-Slater as an independent non-executive director.
• He is described as having “significant public and private company exposure, covering corporate finance, investments, and Board positions of publicly listed companies”.
• Executive Director, Mark Burnett, welcomed the appointments and said that he is looking “forward to working with my fellow directors to … [rationalise] … the portfolio”.
• Mr. Hayden Slater expressed confidence in “the future for the Company … [and commented that there] … is a great opportunity to unlock the underlying value of the Company’s assets and I look forward to working with my fellow directors to achieve that result”.

*SP Angel acts as Nomad and broker to Strategic 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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