SP Angel Morning View -Today’s Market View, Monday 24th February 2025

Gold holds higher ground as dollar continues to weaken

MiFID II exempt information – see disclaimer below

Ceibo Tech (Private) – appoints Cleve Lighfoot , former head of innovation at BHP and ex-Glencore GM, to its board of advisors

Celsius Resources (CLA LN) – Project funding for the MCB project from the Philippines sovereign wealth fund

Equinox Gold (EQX CN) – Merger with Calibre Mining to create combined C$5.4bn mining group

Gemfields Group (GEM LN) – Sale of Zambian emeralds shows improving sentiment from buyers

Perseus Mining (PRU AU) – Half year results show well managed cost control and support from higher gold price

Predictive Discovery* (PDI AU) – Drill results from Fouwagbe and Sounson

Gold ($2,944/oz) holds higher ground as dollar continues to weaken

• Gold is hovering $10/oz below its record highs having enjoyed its longest weekly rally since 2020.
• ETFs are now building holdings, with physical holdings at 85moz now climbing above October levels but still well below Covid peaks.
• Stagflationary PMIs on Friday saw consumer confidence fading and inflation expectations rising, weighing on the dollar.
• The weak dollar also reflects a recent rally in the Japanese yen, on rising interest rate hike expectations.
• Copper and oil prices fell on Friday, perhaps pointing to concerns over slowing global growth.
• Whilst gold has detached from its tight correlation to real yields in recent years, we would expect lower Treasury yields to push further inflows into gold ETFs.

US dollar – is this the beginning of the end or the end of the beginning

• Further, longer-term weakening of the US dollar could have a profound impact on global investment and metals prices
• The dollar appears to be weakening on the expectation for further Trump Tariffs and their impact on the US economy.
• Germany’s CDU election has strengthened the Euro despite ongoing economic woes.
• China continues to struggle with the restructuring of its ‘hidden’ debt and ongoing property crisis.
• Most other nations are also battling with the cost of paying interest on elevated government debt.
• Further weakening of the US dollar should serve to support gold and other metals prices offsetting potential weakening of the US economy.
• Incidentally, a weakening of the US economy should accelerate Fed rate cuts further weakening the US dollar.

China-backed Indonesian nickel smelter faces shutdown

• Bloomberg reports a $3bn nickel smelter in Indonesia is facing closure after the collapse of its parent company.
• PT Gunbuster is delaying payments to local suppliers and is unable to procure ore, reportedly.
• The nickel subsidiary is associated with bankrupt Jiangsu Delong.
• Ore supplies in Indonesia have been tight for the past year owing to the Indonesian government withholding mining quotas.
• Delong has been squeezed by China’s property slowdown and competition from larger Tsingshan.

Sharepickers: Video – Last Time this Happened Gold went up by 180%:  

Economics

US – Equity futures are up following a sell off late last week as inflation expectations hit the highest since mid-1990s and PMIs showed the weakest growth since September 2023.

• Flash Composite PMI dropped to 50.4, the lowest level in 17 months, amid uncertainty regarding new administration trade policies.
• Respondents also cited concerns over higher prices and broader geopolitical risks.
• Input price inflation climbed to the highest since September last year while increased competition helped to keep a lid on final goods and services prices growth.
• Selling price inflation cooled to a three-month low.
• Employment fell slightly led by losses in the services sector while manufacturing payrolls rose only very marginally.
• Services registered the first contraction in two years.
• “Whereas the survey was indicating robust economic growth in excess of 2% late last year, the February survey signals a faltering of annualised GDP growth to just 0.6%,” the report read.
• Preliminary Manufacturing PMI (Feb/Jan/Est): 51.6/51.2/51.4
• Preliminary Services PMI (Feb/Jan/Est): 49.7/52.9/53.0
• Preliminary Composite PMI (Feb/Jan/Est): 50.4/52.7/53.2

Chinese tech shares climb as government indicates enables entrepreneurial tech companies to grow

• Chinese tech stocks had suffered from the mysterious detention of a number of their leaders by the authorities.
• While there are no apologies from the Chinese state recent public meetings between Party officials and tech leaders.
  • Eg President Xi and Jack Ma are encouraging investors in this market
• We expect these companies to continue to growth both within mainland China and overseas as their leadership looks to protect their businesses from future CCP clampdowns.

Germany – CDU/CSU wins elections securing 29% (+4pp) of the vote on Sunday, in line with expectations, with the ruling Scholz’s Social Democratic Party (SPD) coming in third with 16% (-9pp).

• Far right Alternative for Germany (AfD) came in second securing 21% (+10pp), its highest ever share of the vote, with the party posting largest gains compared to previous elections.
• Given that a number of other parties did not manage to clear a 5% minimum barrier votes secured by CDU/CSU and SPD would be enough to form a ruling coalition keeping AfD out of the government.
• Both the euro and the DAX Index are trading higher this morning.

Ukraine/Russia – Discussions over a potential minerals deal continue with President Zelensky disputing the size of first proposed $500bn agreement.

• At the press conference over the weekend Zelensky said that the amount was much higher than the US actual military contribution of $100bn.
• Additionally, Zelensky argued that the assistance was in the form of grant approved by then administration and US Congress rather than debt.
• Kyiv continues to stress the importance of explicit security guarantees to be provided as part of any potential future agreement.
• Ukraine rejected the US argument that American companies doing business in Ukraine would itself serve as a form of security guarantee.
• Separately, Ukrainian President suggested that he is happy to step down if that would mean a peace agreement and Nato membership.

Russia – The EU approves a 16 package of sanctions against Russia on the third anniversary of the war in Ukraine.

• The package includes 48 people and 35 entities sanctions, 73 “shadow” fleet” vessels, restrictions on import of Russian aluminium as well as ban on export a number of technologies related to aviation and oil/gas extraction among other items.

Currencies

US$1.0478/eur vs 1.0481/eur previous. Yen 149.30/$ vs 150.48/$. SAr 18.417/$ vs 18.338/$. $1.264/gbp vs $1.267/gbp. 0.637/aud vs 0.639/aud. CNY 7.248/$ vs 7.253/$.

Dollar Index 106.571 vs 106.620 previous.

Precious metals:

Gold US$2,942/oz vs US$2,922/oz previous

Gold ETFs 84.5moz vs 84.2moz previous

Platinum US$972/oz vs US$973/oz previous

Palladium US$965/oz vs US$973/oz previous

Silver US$32.5/oz vs US$32.8/oz previous

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

Base metals:   

Copper US$9,493/t vs US$9,470/t previous

Aluminium US$2,652/t vs US$2,711/t previous

Nickel US$15,560/t vs US$15,490/t previous

Zinc US$2,894/t vs US$2,892/t previous

Lead US$2,012/t vs US$1,988/t previous

Tin US$33,675/t vs US$33,135/t previous

Energy:           

Oil US$74.2/bbl vs US$76.1/bbl previous

• Crude oil prices fell after Iraq’s oil ministry announced signalled an upcoming resolution to resume crude exports through the Iraq-Turkey pipeline.
• The US Baker Hughes rig count was up 4 to 592 units last week (-34 or 5% y/y), with oil rigs up 7 to 488 units (-15 y/y) and gas rigs down 2 to 99 units (-21 y/y), as Oklahoma added 5 rigs to 49 units (+5 y/y).
• OFS peers Saipem and Subsea7 announced plans for a merger of equals, called Saipem7, that would generate ~€20bn annual revenues and over €4bn EBITDA combined, which would be better able to service the growing size of their clients’ projects and also achieve annual synergies of €300m within three years.

Natural Gas €46.5/MWh vs €47.6/MWh previous

Uranium Futures $65.4/lb vs $65.4/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$107.7/t vs US$107.7/t

Chinese steel rebar 25mm US$488.3/t vs US$488.1/t

HCC FOB Australia US$186.5/t vs US$187.5/t

Thermal coal swap Australia FOB US$102.8/t vs US$106.5/t

Other:  

Cobalt LME 3m US$21,550/t vs US$21,550/t

NdPr Rare Earth Oxide (China) US$60,913/t vs US$61,288/t

Lithium carbonate 99% (China) US$9,934/t vs US$9,996/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$343/mtu vs US$343/mtu

China Graphite Flake -194 FOB US$430/t vs US$430/t

Europe Vanadium Pentoxide 98% US$4.4/lb vs US$4.5/lb

Europe Ferro-Vanadium 80% US$23.8/kg vs US$24.3/kg

China Ilmenite Concentrate TiO2 US$297/t vs US$297/t

Global Rutile Spot Concentrate 95% TiO2 US$1,543/t vs US$1,543/t

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

Brazil Potash CFR Granular Spot US$320.0/t vs US$317.5/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 want domestic e-bike industry to shift from li-ion to lead-acid chemistry

• China has begun encouraging its citizens to trade their lithium-ion battery-powered e-bikes for newer models that use sealed lead-acid (SLA) batteries.
• The Chinese government is now backing a resurgence of SLA-powered e-bikes as it seeks to control safety.
• China has approx. 350m electric two-wheelers on the road, with e-bikes becoming the go-to method of transport in cities.
• Lithium-ion batteries are now the most common amongst e-bikes due to their lightweight, efficiency, and longer lifespan.
• Safety concerns surrounding lithium-ion batteries have led to a significant shift in policy, with several e-bike fires making headlines.
• New policies could speed up the introduction of sodium-batteries that combine the performance of lithium-ion batteries and the safety of SLA batteries.
• SLA Lead-acid batteries are significantly cheaper and heavier but are good for short range journeys.
• The introduction of safer, Solid-State Li-ion batteries Li-ion batteries and falling Li-ion pack prices is likely to reverse the drive towards SLA batteries in the next few years.
• We caution anyone with a Li-ion battery pack to store it outside and away from flammable materials.

Hydrogen-truck maker Nikola files for bankruptcy

• The US-based truck maker has filed for Chapter 11 bankruptcy protection, revealing its cash balance has fallen to $47m.
• Nikola joins several other US based, including Fisker, Arrival and Lordstown Motor.
• Startups globally have, in general, struggled to keep up in the competitive EV space with EV giants Tesla and BYD dominating global markets.

Company News

Ceibo Tech (Private) – appoints Cleve Lighfoot , former head of innovation at BHP and ex-Glencore GM, to its board of advisors

• Ceibo, a BHP backed Chilean mining tech Company, appoints Cleve Lighfoot , former head of innovation at BHP and ex-Glencore GM, to its board of advisors.
• Ceibo signed a deal with Glencore November last year to test its sulphide leaching technology to extract copper from ore at Glencore’s Lomas Bayas copper mine.
• Following two years of laboratory trials, Ceibo will start on site testing.
• “Ceibo technology has a high recovery rate, and we’ve demonstrated with ores from more than 30 parts of the world already, and that we can recover between 70 to 80% in timeframes that are somewhere between 150 to 250 days…compared to bioleaching platforms or technologies that are based on bioleaching,” Ceibo CEO Cristobal Undurraga said.
• Ceiba reports an estimated short payback for the tech saying that incremental investment is earned back in less than a year.
• Ceibo has a number of partnerships and claims it is working with “about 40% of world production”.

Celsius Resources (CLA LN) 0.6p, Mkt Cap £13.4m – Project funding for the MCB project from the Philippines sovereign wealth fund

• Celsius Resources reports that it has agreed a bridging loan for up to US$76.4m with Maharlika Investment Corporation (MIC), the Philippines sovereign wealth fund, for its Maalinao-Caigutan-Biyog (MCB) Copper-Gold Project on Luzon approximately 320km north of Manila.
• “The Facility is intended to fully finance the updating of the Company’s feasibility study (“FS”) and Front-End Engineering Design (“FEED”), and partially funding early development activities, including main access road construction”.
• A 2021 study described an initial investment of US$253m delivering a post-tax NPV_8% of US$464m and an IRR of 31%. The study was based on lower commodity prices than currently prevail with an assumed copper price of US$4:00/lb and a gold price of US$1,695/oz.
• The funds will also enable Celsius Resources’ operating company “MMCI to comply with the financial capability requirements under its Mineral Production Sharing Agreement with the Philippine Government”.
• The 3-year facility attracts 12.5% pa interest, compounded quarterly, and is secured “on MMCI’s mining rights and project-related property”.
• Chairman, Julito Sarmiento, welcomed the support of MIC and said that its “decision to invest in the MCB Project underscores the Philippine Government’s strong commitment to advancing the critical metals sector and fostering a responsible mining industry that delivers meaningful benefits to host communities”.
• The project hosts a December 2022 “JORC compliant Mineral Resource Estimate … [of] … 338 million tonnes @ 0.47% copper and 0.12 g/t gold” with a planned mine life of 25 years treating 2.25mtpa of ore. to produce an average of around 16,000tpa of copper and 19,000oz pa of gold.
• In April 2024, the company’s quarterly report for the 3 months to 31^st March highlighted the granting of a mining licence for the project.

Conclusion: The MCI funding for the MCB project enables the 2021 technical studies to be updated and initial site access work to start. We await further news with interest

Equinox Gold (EQX CN) C$9.7, Mkt Cap C$4.4bn – Merger with Calibre Mining to create combined C$5.4bn mining group

• Equinox Gold and Calibre to merge, with Calibre shareholders receiving 0.31 Equnox shares for each Calibre share held.
• Equinox shareholders will hold 65% and Calibre 35% respectively of the MergeCo.
• Implied market cap of the combined companies estimated at C$7.7bn.
• The MergeCo portfolio will span producing assets across five countries in the Americas, with aims for >1.2mozpa gold production.
• Company notes ‘greater scale, lower risk, near-term production growth, and superior free cash flow relative to peers’ as the incentive for the merger.
• Equinox is backed by Ross Beaty and Calibre is backed by Featherstone Capital.

Gemfields Group (GEM LN) 6.25p, Mkt Cap £73m – Sale of Zambian emeralds shows improving sentiment from buyers

• Gemfields reports that it has realised US$4.8m from the sale of 45,864 carats of emeralds from its 75% owned Kagem mine in Zambia.
• The announcement describes the emeralds as “previously unsold higher-quality emeralds from the November 2024 auction” and the announcement confirms that 10 of the 13 lots offered were sold realising an average price of US$105.49/carat.
• Managing Director, Adrian Banks, explained that as the lots were previously offered it provided an opportunity “to directly compare demand and pricing between two auctions” in November 2024 and February 2025.
• Mr. Banks explained that the latest auction received “notably higher bids” and although “market sentiment remains clearly subdued, it is encouraging to see improvement in both demand and pricing”.
• We note that although the company is encouraged by improving sentiment, prices still remain relatively subdued with the November 2024 auction, which did not attract sales of the emeralds reported today, realising an average of US$114/carat on total sales of 209,000 carats.

Perseus Mining (PRU AU) A$2.9, Mkt Cap A$3.9bn –  Half year results show well managed cost control and support from higher gold price

• African gold producer Perseus reports EBITDA of US$353m for the half year to 31^st December.
• The Company reports operating cash flows increased to US$248m.
• Cash and bullion position increased to US$704m, no debt and an undrawn facility of US$300m.
• Gold production over the period at 254koz with AISC of US$1,162/oz.
• Guidance reiterated at 469-504koz at US$1,250-1,280/oz AISC.

Predictive Discovery* (PDI AU) A$0.33, Mkt Cap A$756m –  Drill results from Fouwagbe and Sounson

• Guinean gold developer Predictive reports results from their resource definition drilling at Fouwagbe and Sounson.
• Company reports ‘highly encouraging’ results from Sounsoun which were targeting a 1.8km NE-SW anomaly/
• Additional drilling at SOunson include 27 holes over 4,546m, with a further six holes pending.
• Highlights include:
  • 17m at 1.76g/t from 35m and 23m at 3.07g/t Au from 77m
  • 2m at 16g/t Au from 164m and 3m at 25g/t Au from 171m
  • 6m at 9.1g/t Au from 154m
  • 8m at 6g/t Au from 119m
• Fouwagbe drilling is believed to have extended ‘known mineralisation in some areas and indicate the potential for additional mineralised shoots.’
• Fouwagbe drilling has ‘defined a series of parallel SW plunging shoot-like zones of mineralisation hosted in a set of anastomosing NE and NNE shear zones.’
• Shoots are expected to be open down-plunge.
• Company notes particular encouragement from the Sounsoun target, with the best hole ending in mineralisation.
• Company expects to deliver maiden resources on the targets this quarter.

*An SP Angel analyst holds shares in Predictive Discovery

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 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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