SP Angel Morning View -Today’s Market View, Friday 10th January 2025

Copper prices rise on signs of demand rebuilding in China

MiFID II exempt information – see disclaimer below

SP Angel received great news this week from the LSEG StarMine commodities forecast polling team

• SP Angel – 1^st in LSEG StarMine Precious Metals poll for 2024
• SP Angel – 2^nd in LSEG StarMine Base Metals poll for 2024

ACG Metals (ACG LN)– ACG raises £200m in bond placing for Gediktepe copper, gold mine in Turkey

Arizona Sonoran (ASCU CN) – C$19.9m private placement from Hudbay Minerals

Thor Explorations (THX LN) – Segilola exploration results

Vast Resources (VAST LN) – CEO loan

Zijin Mining (2899 HK) –Zijin to boost lithium exposure with $6bn acquisition

Copper – prices rise to $9127/t on signs of demand rebuilding in China

• Copper cathode inventories in Shanghai and Guangdong fell to 82,200t on Thursday, close to a year low according to Shanghai Metals Market.
• Premiums for domestic and imported cargoes also rose to the highest level since September and December respectively.
• Shanghai Futures Exchange fell 4,496t this week to 78,678t .

Gold ($2,680/oz) ticks higher as traders position themselves for US labour data

• Gold prices have consolidated higher, pushing through the previous $2,666/oz level to hit $2,680/oz.
• Prices have been consolidating for some time now, despite traditional headwinds coming from the strong dollar and soaring US treasury yields.
• The move higher likely reflects a confluence of factors, namely likelihood the dollar rally is cooling.
• The dollar index has failed to break through 109.2 after the 10 year hit recent highs of 4.71%.
• Meanwhile, the yen sell-off is cooling after BoJ officials noted potential for rate hikes amid rising inflation.
• On the other hand, the Chinese yuan has been weak despite intervention attempts from the PBoC.
• Both the Chinese central bank and retail are now considered key gold buyers, with China adding to reserves in both November and December.
• Focus today will be on the NFP data, with a weaker print expected to lift old whilst a beat to expectations will probably add some short-term selling to the metal.

It’s been an unusual start to the year partially due to many investors taking extended break but largely due to uncertainty over the implementation of Trump’s tariffs

• But the Sky has yet to fall in on our heads and there is some thought that Trump might soften his Tariff demands, though Trump has denied this.
• The press now appear to be trying to trip up Trump by phrasing questions in certain ways.
• We do not believe Trump has any intention of invading Greenland or Panama.
• But, China is encroaching on both Panama and Greenland threatening US influence in both regions.
• Trump would like to buy Greenland and Greenland might prefer to align with the US and become the 51^th state in preference to Denmark.
• Panama is a different issue with China having funded the second Panama canal.
• Metals prices now seem to be settling into a more positive trajectory despite the stronger dollar supported by new buying in China.

Economics

US – Labour numbers are due later today and will closely be closely watched amid uncertain monetary policy outlook.

• Estimates are for a 165k reading, down on 227k in November.
• Unemployment rate expected to hold at 4.2% with wages forecast to continue to grow at unchanged rate of 4.0%.
• Fed Governor Michelle Bowman argued for a “cautious” approach in further easing given stubborn inflation and uncertainty regarding incoming Trump administration.
• “I also continue to be concerned that the current stance of policy may not be as restrictive as others may see it… given the ongoing strength in the economy, it seems unlikely that the overall level of interest rates and borrowing costs are providing meaningful restraint,” she said.
• Bowman dissented from a 50bp rate cut in September last year arguing for a smaller 25bp move.
• Boston Fed President Susan Collins said that she would prefer fewer rate cuts than she had anticipated a few months ago.
• Collins highlighted robust economic growth and noting slower than expected progress on bringing inflation down.
• Collins will become a voting member at the coming meeting January 29.
• Philadelphia Fed President Patrick Harker (non voting member) said that he would support more rate cuts in 2025, although, the timing will depend on the incoming data.

LA fires: News reports suggest that US insurers have excluded fire from many policies on houses in the LA region.

• This news will simply add to the despair as former residents returning to the charred remains of their properties.

China – to temporarily stop buying of its government bonds with demand outstripping supply

• The CNY / USD interest rate has expanded to its largest ever discount indicating the CNY should go lower.
• The Chinese new year starts on 29 January and runs to 3^rd February
• 2025 will be the ‘Year of the Snake’
• We expect a number of Lunar new year shopping events to stoke demand for Electric Vehicles, new property and household appliances
• The party may use the new year to effectively kick off a drive for greater internal consumption (Dual Circulation) as they move to inflate demand in the economy.

Japan – household spending fell for its fourth consecutive month in November by  -0.4% yoy vs a -1.3% fall in October

• Households held back on buying home appliances and food as concerns grow for the economic outlook.
• Expenditure fell a massive -13.8% yoy on furniture and electric appliances.
• Clothing and footwear also fell -13.7% yoy.
• Food contracted -0.6% yoy.
• Some of the falls may also be attributed to cheaper imports from China.

Germany – Insolvencies jumped nearly 27% in 2024 as the economy struggled with high inflation, rising costs and waning overseas demand.

• Final numbers may prove to be even worse as the rate accelerated toward the end of the laast year.
• In October that was the last month with full available data the measure increased 36%.
• “The new insolvency figures are a clear warning signal… the outlook for 2025 also gives little reason for hope,” the statement read.

France – Industrial production picked up in November, albeit, from lower base than previously thought.

• Industrial Production (%mom, Nov/Oct/Est): 0.2/-0.3(revised from -0.1)/-0.1
• Industrial Production (%yoy, Nov/Oct/Est): -1.1/-0.9(revised from -0.6)/-1.3

Currencies

US$1.0301/eur vs 1.0300/eur previous. Yen 157.83/$ vs 158.12/$. SAr 18.963/$ vs 18.927/$. $1.22/gbp vs $1.228/gbp. 0.619/aud vs 0.619/aud. CNY 7.350/$ vs 7.332/$.

Dollar Index 109.17 vs 109.22 previous.

Precious Metals

Gold US$2,679/oz vs US$2,665/oz previous

Gold ETFs 82.8moz vs 82.9moz previous

Platinum US$998/oz vs US$956/oz previous

Palladium US$948/oz vs US$927/oz previous

Silver US$31.2/oz vs US$30.2/oz previous

Rhodium US$4,725/oz vs US$4,725/oz previous

Base metals:   

Copper US$9,118/t vs US$9,066/t previous

Aluminium US$2,565/t vs US$2,527/t previous

Nickel US$15,876/t vs US$15,420/t previous

Zinc US$2,879/t vs US$2,849/t previous

Lead US$1,967/t vs US$1,946/t previous

Tin US$30,079/t vs US$30,080/t previous

Energy:           

Oil US$77.9/bbl vs US$76.2/bbl previous

• Crude oil prices moved higher on market concerns that sub-zero temperatures in Europe and the US would drive heating demand and potential supply disruptions.

Natural Gas €44.2/MWh vs €45.1/MWh previous

Uranium Futures $72.9/lb vs $72.9/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$98.1/t vs US$97.1/t

Chinese steel rebar 25mm US$485.2/t vs US$486.0/t

HCC FOB Australia US$195.0/t vs US$197.0/t

Thermal coal swap Australia FOB US$117.0/t vs US$120.4/t

Other:  

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

NdPr Rare Earth Oxide (China) US$54,555/t vs US$54,763/t

Lithium carbonate 99% (China) US$9,820/t vs US$9,821/t

China Spodumene Li2O 6%min CIF US$790/t vs US$790/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$4.8/lb vs US$4.8/lb

Europe Ferro-Vanadium 80% US$25.6/kg vs US$25.6/kg

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

China Rutile Concentrate 95% TiO2 US$1,084/t vs US$1,084/t

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

Brazil Potash CFR Granular Spot US$295.0/t vs US$295.0/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$390.0/kg

Battery News

Company News

ACG Metals (ACG LN) US$5.10, Mkt cap £79m – ACG raises £200m in bond placing for Gediktepe copper, gold mine in Turkey

• Artem Volynets, the founder and ceo of ACG Metals has raised £200m for the expansion of the Gediktepe copper, gold mine in Turkey.
• Bond coupon: 14.75% with settlement due on 13^th January
• The bonds will be listed on the Nordic ABM
  • “all outstanding balances on ACG’s existing gold prepay debt facility with Traxys Europe S.A. and Argentem Creek Partners will be consolidated into the bonds, resulting in one USD 200 million senior debt instrument in the Company’s capital structure. The new bonds are callable at ACG’s option after two years.”
• The Mine in the West of Turkey started production in 2021 with $91m invested  to date.
• Gediktepe currently produces a gold / copper dore but will transition to a pure copper concentrate as the mine deepens into sulphide ores.
• Funds to be used to fully finance the Sulphide expansion project at the Gediktepe mine and for general corporate purposes.
  • CAPEX: $146m for fixed price EPC contact with GAP INSAAT, a Turkish contractor and subsidiary of Çalik Holdings, a major shareholder.
  • Sulphide plant first production due early 2026.
  • Op margin of 73% estimated by the company on the Sulphide plant assuming consensus pricing
  • Production: 20-25,000tpa copper equivalent in concentrate (40,000ozpa Aueq).
  • Post-tax IRR: 30%
  • AISC: US$1.99/lb ($4,387/t) est 2026-2035
  • AISC in 2023 US$975 for gold
  • Revenue $80m est. in 2024, company estimate
  • EBITDA $50m est. in 2024, company estimate
• Mineral Resources (MRE):
  • Resource: MRE 26.1mt
  • Reserves: 18.5mt
  • Grade 2.26%
• Potential to add further oxide within trucking distance of the process pland.
• Sulphide ores also appear to extend with depth according to a recent company presentation.

Conclusion: The bond placing highlights how a mine with existing cash flow and established expansion potential can be financed through the capital markets.

Arizona Sonoran (ASCU CN) C$1.64, Mkt Cap C$222m – C$19.9m private placement from Hudbay Minerals

• Copper explorer and developer Arizona, who hold the brownfield Cactus Project in Arizona, have received an investment from Hudbay.
• Hudbay will subscribe for C$19.9m worth of new shares at C$1.68/shr, providing a 9.99% interest in ASCU.
• The placing reflects a 15% premium to five-day VWAP.
• Hudbay management states that the ‘US as a tier-1 mining jurisdiction and this investment increases our exposure to another high-quality development project.’
• Cactus is an open pit, heap leach SXEW project targeting 86ktpa Cu over a 31 year LOM.
• The PEA suggests an after tax NPV8 of US$2bn, IRR of 24% using a copper price of US$3.9/lb.
• Total M&I resource of 633mt at 0.54% CuT.
• Development CAPEX of US$668m and sustaining CAPEX of $1.2bn with AISC at US$2/lb.

Thor Explorations (THX LN) 18.3p, Mkt Cap £117m – Segilola exploration results

• Nigerian gold producer Thor is currently looking to extend the LOM at its Segilola operation.
• Today the Company reports results from four further holes:
  • SNMDD023: 6m at 2.2g/t Au from 69m
  • SNMDD027: 1.8m at 40g/t Au from 222m
  • SNMDD028: 3.4m at 4.8g/t Au from 74m
• Hole 27 sees management suggest the potential for a ‘high-grade shoot in the northern parts of the deposit.’
• Thor will continue drilling the Segilola structure.

Vast Resources (VAST LN) 0.1pp, Mkt Cap £3m – CEO loan

• Andrew Prelea, CEO provided a €500k loan to the Company.
• The loan is unsecured, interest free and is repayable when the Company finalises funding.

Zijin Mining (2899 HK) HK$15, Mkt Cap HK$400bn –Zijin to boost lithium exposure with $6bn acquisition

• Zijin Mining, China’s large copper and gold miner, is in talks to buy Zangge Mining Co.
• The Company stated this morning they are in discussion with Zangge’s two largest shareholders over the potential acquisition of Zangge Mining.
• Zangge holds fertiliser and lithium assets in China.
• It holds lithium brine assets in Qinghai Province, with its Golmod project starting production in 2020 at 10ktpa LCE.
• Company reported c.US$465m in net profit in 2023.
• Zangge is a junior partner in Zijin’s Julong copper mine in Tibet following an acquisition in 2020.
• Zijin holds brine assets in Argentina, Xizang and hard rock assets in Hunan and the DRC>
• The Company is targeting 250-300ktpa LCE production by 2028.
• The Company is building the 40-50ktpa Lakkor Tso lithium project in China which uses DLE via adsorption, membrane separation and electrodialysis.

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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