SP Angel Morning View -Today’s Market View, Friday 7th March 2025

Copper continues to rise on trade war concerns and renewed China growth optimism

MiFID II exempt information – see disclaimer below

Endeavour Mining (EDV LN) – 2024 results as focus shifts to Assafou progression

Fortuna Mining (FVI CN)– Full year results show ramp up from Seguela

Metals Exploration (MTL LN) – Bridge loan repayment in shares

Premier African Minerals (PREM LN) – £600,000 fund-raising for Zulu lithium project

Sovereign Metals* (SVML LN) – Interim report highlights rapid progress in optimisation and advance towards new JORC resource and DFS

Copper ($9,690/t) higher on trade war concerns and renewed China growth optimism

• Copper prices grinded higher yesterday on Trump’s 25% tariff comments and more positive signalling from Beijiing.
• The PBoC is keeping the yuan stable despite trade war volatility, with a weaker dollar boosting Chinese buying power in the international market.
• The Yuan rose to its highest level since November this week, with the NPC reiterating 5% growth targets.
• The PBoC continues to hint at further support, with expectations of additional reverse repo support now that government bond yields are climbing.
• Beijing is also reportedly set to end price caps on unsold home purchases, which may ease the financial burden on developers whilst lowering prices.
• Many homes are currently subject to a price ceiling and the move could boost local government plans to buy unsold units from developers.
• The Bloomberg China real estate index rose 5% overnight.
• New apartment prices stabilised in January after falling for the past three years, whilst excess inventory sits at c.382msqm.

Chinese steelmaker stocks rally on continued expectations for capacity cuts

• China steelmaker equities rallied overnights on reports of government policy to cut overcapacity in a joint-ministry meeting yesterday.
• The chairman of the National Financial Regulatory Administration stated that China is set to phase out inefficient capacity of key industries, without naming the steel sector.
• Mysteel report that Shandong steel mills are set to begin cutting output.
• Speculators suggest that c.4mt of capacity will be cut.
• China steel mill stockpiles fell late in February, with inventory levels down 2.5% to 16.3mt.
• Production volumes remain at 20 month highs.
• Whilst lower national steel production is likely bearish for iron ore, we expect higher profitability in steel mills to feed into expanding high-grade iron ore premiums.

Gold ($2,920/oz) holds strong as geopolitical tensions mount and US dollar slides

• Gold prices have held their ground this week, despite sell-offs across asset classes.
• A weaker US dollar, which is being weighed down by rallying Euro/Japanese Yen, is supporting gold’s higher levels.
• Asian gold interest continues to mount, with Thailand’s Siam Commercial Bank set to offer online bullion trading service.
• The move followed reports that Indonesia is integrating bullion banks into their mainstream financial system.
• Gold is currently popular with Chinese retail investors amid currency devaluation concerns and a faltering property market.
• Tensions between the US and China are also likely supporting gold prices, with Foreign minister Wang Yi stating that ‘no country should fantasise that it can suppress China and maintain good relations with China at the same time.’
• He also stated that ‘such two-faced acts are not good for the stability of bilateral relations.’

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

Economics

Tariffs: President Trump signed an executive order yesterday with all goods that are compliant with a 2020 free trade deal will get a one-month carve out from latest 25% tariffs on Canadian and Mexican imports. (FT)

• US signalled that relief may be extended past 2 April if countries succeeded in bringing down trafficking of the fentanyl.
• The administration also lowered the duty on potash imports from Canada that do not comply with the USMCA to 10% providing some relief to American farmers that source most of their fertilizer (~80%) from Canada.
• President Trump is seen restraining cost cutting effort by Musk’s DOGE amid mounting disquiet among Republicans and cabinet members over the speed and breadth of layoffs. (FT)
• Following a meeting with secretaries of state and Musk, President Trump said that “its very important that we cut levels downs to where they should be, but its also important to keep the best and most productive people”.
• “We say the ‘scalpel’ rather than the ‘hatchet’.”
• Canada – Tariffs delayed till 2^nd April

ECB cuts rates by 25bp to 2.5% as expected

US – Non-farm payrolls numbers are due later today with expectations for a 160k headline reading, up from 143k in January.

• Jobless rate is expected to stay at 4.0% with a slight pullback in labour earnings growth to 0.3%mom from 0.5%mom.
• ADP private employment change rose 77k in February vs 186k in January
• Final Q4 nonfarm productivity rose 1.5% vs 2.9% in Q3
• Labour cost rose 2.2% vs –0.5%.
• US stocks sold off sharply on Thursday on a renewed selling in the tech sector with S&P 500 down 1.8% on course for its worst week since early September.
• Nasdaq fell 2.6% yesterday extending losses from a record high hit mid-February to 11.8%.
• The selloff was led by computer chips stocks with the Philadelphia Semiconductor Index down 4.5% and 24% from its July 10 record.
• Selling is being driven by concerns over US administration trade wars, sticky inflation and fears of a potential recession, or worse stagflation. (Bloomberg)
• BlackRock buys two ports on the Panama canal plus 43 other ports in 23 countries from CK Hutchinson.
• Feb Challenger job losses 172k vs 49.75k in January due to Federal government layoffs
• Initial jobless claims fell to 221k from 242k as sacked Federal workers taking voluntary redundancy continue to get paid till September.

Mch RCM/TIPP economic optimism index 49.8 vs 52.0 in February and 43.2 last April

LMI logistics manager index rose to 62.8 in February vs 62.0 in January and 58.3 last March with lots of orders being moved ahead of Tariff introduction.

China – Twin Sessions set GDP target of ~5% for 2025 and raise the budget deficit to 4% of GDP from 3%

• China is also raising defence spending by 7.2%. W

Exports hit record levels as firms frontloaded shipments in expectations for higher US tariffs.

• The value of overseas shipments climbed 2.3%yoy in two months to February reaching $540bn.
• Imports were down 8.4% coming in at $171bn.
• Nevertheless, the data came in below estimates for 5.9% and 1.0% increase in exports and imports, respectively.
• The US imposed a 10% tariff on almost all Chinese imports in early February followed by a hike to 20% earlier this week.
• German parliament could change strict fiscal debt rules and loosen the debt brake to enable expenditure >1% of GDP.

UK – Property prices pull back slightly as the current stamp duty holiday is due to expire March 31.

• Prices were down 0.1%mom to £299k latest Halifax numbers showed.
• From April first time buyers will start paying taxes on purchases of £300k or more, rather than £425k at present.

PMI Services, nonmanufacturing and composite data,

Currencies

US$1.0853/eur vs 1.0804/eur previous. Yen 147.49/$ vs 148.14/$. SAr 18.069/$ vs 18.352/$. $1.292/gbp vs $1.290/gbp. 0.632/aud vs 0.634/aud. CNY 7.236/$ vs 7.243/$

Dollar Index 103.761 vs 104.194 previous

• The US dollar index continues to fall as the Yen rallies and US bond yields slide on negative economic data as business prepare for disruption from new tariffs.
• Expectations for inflation remain relatively low due to negative growth outlook and GDP Now (Atlanta Fed) showing a negative growth rate and potential for recession.

Precious metals:         

Gold US$2,920/oz vs US$2,907/oz previous

Gold ETFs 86.0moz vs 85.9moz previous

Platinum US$975/oz vs US$963/oz previous

Palladium US$948/oz vs US$943/oz previous

Silver US$32.6/oz vs US$32.5/oz previous

Rhodium US$5,300/oz vs US$5,000/oz previous

Base metals:   

Copper US$9,653/t vs US$9,628/t previous

Aluminium US$2,690/t vs US$2,682/t previous

Nickel US$16,275/t vs US$16,050/t previous

Zinc US$2,911/t vs US$2,909/t previous

Lead US$2,030/t vs US$2,037/t previous

Tin US$32,495/t vs US$32,050/t previous

Energy:           

Oil US$70.0/bbl vs US$69.5/bbl previous

• Crude oil prices bounced off three-year lows following President Trump’s decision to delay the implementation of tariffs on imports from Canada and Mexico for all goods covered by the North American trade agreement known as USMCA, which includes energy.
• European energy prices slumped after the EC delayed an update of its plan to reduce reliance on Russian fossil fuels, which could signal potential for restoring energy flows in the event of an end to the war in Ukraine.
• US Henry Hub natural gas prices fell after the EIA reported a below expectation (-94bcf) w/w draw of 80bcf to 1,760bcf, with storage inventories stabilising at 24.9% below last year and 11.3% below the 5-year average.
• Vår Energi announced plans to issue €1bn of 6-year bonds that carry an annual fixed coupon of 3.875% with an issue price of €99.23, equivalent to a yield of 4.022%. The order-book over 4 times oversubscribed at peak.
• BW Energy (73.5% WI) and Panoro Energy (17.5%) announced a significant oil discovery at the 29mb Bourbon prospect in the offshore Gabon Dussafu Marin Permit, which potentially establishes the foundation for a new development cluster on the block with a production facility following the MaBoMo blueprint.
• Dana Petroleum terminated the agreement with NEO Energy for the proposed purchase of the Western Isles FPSO, which has reached its longstop date. Jersey commented that the JV’s ability to recommit to the FPSO acquisition for the Buchan Horst project is linked to the results of the three ongoing government consultations.

Natural Gas €37.3/MWh vs €41.6/MWh previous

Uranium Futures $64.1/lb vs $64.1/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$106.9/t vs US$106.9/t

Chinese steel rebar 25mm US$487.1/t vs US$487.0/t

HCC FOB Australia US$184.8/t vs US$184.7/t

Thermal coal swap Australia FOB US$106.5/t vs US$104.3/t

Other:  

Cobalt LME 3m US$26,230/t vs US$25,225/t

NdPr Rare Earth Oxide (China) US$60,947/t vs US$61,370/t

Lithium carbonate 99% (China) US$10,020/t vs US$9,941/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$348/mtu vs US$343/mtu

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

Europe Vanadium Pentoxide 98% US$4.8/lb vs US$4.8/lb

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

China Ilmenite Concentrate TiO2 US$301/t vs US$300/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$322.5/t vs US$322.5/t

Germanium China 99.99% US$2,825.0/kg vs US$2,825.0/kg

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

Battery News

European Commission automotive action plan gives EU battery makers some hope

• The European Commission released its automotive action plan earlier this week, placing the EU battery industry at the centre of its decarbonisation and industrial strategies.
• With the new action plan, the Commission indicated it wants to support the EU’s battery industry with actions spanning from financial support and made-in Europe mandates to export bans on valuable waste.
• The introduction of local-content requirements for battery cells and components in EVs sold in the EU would de-facto grant EU-based battery producers a slice of the market.
• The Commission promised to “look into EU direct production support to companies manufacturing batteries in the EU”, clarifying that these money could be “combined” with state aid.
• The action plan also suggests new measures aimed at securing access to key raw materials, in addition to defending and supporting the European battery industry.

Toyota launches its cheapest EV in China as it seeks to claw back market share

• Toyota began selling a $20,000 EV in China this week as it seeks to gain back some of the market share it has lost to Chinese rivals.
• The bZ3X is Toyota’s cheapest fully electric model to date and has been marketed as having all the ‘smart’ features that its competitors have been building their EVs with.
• Toyota is also tyring to change the perception in China that Japanese EVs are expensive and unintelligent.
• The bZ3X received over 10,000 orders in the first hour.
• There is little data on how Japanese EVs have fared in China as they never make the major sales rankings.

Company News

Endeavour Mining (EDV LN) 1,630p, Mkt Cap £4.1bn – 2024 results as focus shifts to Assafou progression

• Endeavour reports full year financial results.
• The Company produced 1.1moz over the year, selling at an average price of $2,349/oz with AISC at $1,218/oz.
• Production rose 32koz but AISC rose 26% .
• Endeavour guides for 1,110-1,260koz production in 2025 at AISC of $1,150-1,350/oz.
• Operating cash flow stood at $950m vs $619m prior year, with free cash flow increasing to $313m from -$174m in 2023.
• Company paid $240m in dividends and $37m in buybacks vs $200m and $66m respectively in 2023.
• Net debt rose to $732m vs $555m 2023.
• Management states plans to ‘prioritise maximising free cash flow generation to support our increased commitment to shareholder returns.’
• The Company’s current growth plans are focused on Assafou, as it aims to grow production to 1.5mozpa by 2030.
• Assafou DFS due for completion before early 2026.
• Assafou PFS shows 329kozpa at AISC of $892/oz over first 10 years, with a post-tax NPV5 of $1,526m at $2,000/oz Au, 28% IRR.

Fortuna Mining (FVI CN) C$6.6, Mkt Cap C$2.1bn– Full year results show ramp up from Seguela

• Diversified miner Fortuna reported full year financial results for 2024.
• The Company generated US$344m in mine operating income, with free cash flow from operating activities at US$203m.
• CAPEX over the period of US$142 alongside US$51m in non-sustaining CAPEX.
• AISC over the year at US$1,640/oz, up 11% from US$1,480/oz in 2023.
• Cash balance grew 81% to US$231m over the year.
• Company suggests that increase in costs a result of lower head grades at Seguela over 2024, vs lower stripping and mining costs in 2023.
• Fortuna produced 4556koz over 2024, at the low end of their guidance.
• Fortuna has sold their San Jose mine to ‘remove our highest cost ounces and refocus capital and management’s attention to high-value opportunities in the portfolio.’

Metals Exploration (MTL LN) 5.5p, Mkt Cap £140m – Bridge loan repayment in shares

• The Company repays £5.6m worth of debt provided by Drachs to complete Condor acquisition in shares.
• The Company will transfer 94.1m shares held in treasury to Drachs.
• Issue price of 6p was used representing a ~9% premium to the mid market close price on Thursday.
• Drachs now holds 16% (430m shares) in the Company post the transfer.
• Repayment in shares allows the Company to retain cash to progress its exploration and development works in Philippines and Nicaragua.

Premier African Minerals (PREM LN) 0.02p, Mkt Cap £7.8m – £600,000 fund-raising for Zulu lithium project

• Premier African Minerals has raised £600,000 by a subscription for4,800m new shares at a price of 0.0125p/share.
• The additional funds are described as an interim solution following yesterday’s announcement of continuing efforts to raise a total £3.5m to complete modifications to its Zulu lithium plant in Zimbabwe.
• The company takes the opportunity to emphasise the “fundamental importance that Premier continues to support all essential operational requirements at both Premier and Zulu while Premier is actively seeking to secure a fully funded solution for Zulu and continues engaging with both existing stakeholders and new potential investors, with a particular focus on Zulu’s prepayment and offtake partner with whom detailed discussions continue”.
• Today’s announcement also confirms the issue of an additional 1,840m shares to a contractor invoice of US$3m (~£0.23m).  Together, we estimate that the two tranches of shares represent around 14% of the enlarged company.

Sovereign Metals* (SVML LN) 45p, Mkt Cap £267m – Interim report highlights rapid progress in optimisation and advance towards new JORC resource and DFS

(Sovereign currently holds 100% of the Kasiya project. Malawi has 10% free carry right. Rio Tinto holds 19.9% of Sovereign Metals)

STRONG BUY – Valuation 55p

• Optimised Pre-Feasibility Study completed in January highlights significant value in January vs September 2023 US$:
• Throughput:
  • 12mtpa for Stage 1 rising to 24mtpa in Stage 2
• Production
  • Rutile:  222,000tpa vs 222,000tpa – no change to throughput or production
  • Graphite:  233,000tpa vs 244,000tpa
• Financial metrics
  • Capex (Stage 1):  $665m vs $597m eg for years 1 to 4. Shows a relatively minor uplift
  • Capex (LoM):  $1,127m vs $1,250m – for life of mine.
  • Sustaining capex:  $397m vs $470 – shows a significant reduction
  • Operating costs:  $423/t of production vs $404/t FOB port of Nacala. – again a relatively small uplift
  • Revenue $640mpa vs $645mpa
  • Revenue (total LoM):  $16,367m vs $16,121m
  • EBITDA: $409m vs $405m – highlights a rise in value of the overall project
  • NPV@8:  $2,322m vs $2,419m pre-tax
  • IRR:  27% vs 32% pre-tax

Assumptions:

• • Rutile: US$1,490/t  (Iluka report rutile at $1,662/t today for Q4 for 95% grade rutile)
  • Graphite: US$1,290/t
• Rehabilitation studies show positive results with local farmers able to farm land in the first subsequent growing season after mining and rehabilitation.
• Rio Tinto also invested a further A$18.5m in Sovereign Metals to raise their shareholding to 19.9% in July 2024.
• Graphite: quality testing shows “Kasiya graphite concentrate with performance characteristics comparable to highest quality natural graphite battery material produced by dominant Chinese anode manufacturers”
  • “graphite concentrate produced from Kasiya exhibits prerequisite characteristics for selling graphite to the refractory materials sector”
  • “Kasiya’s graphite also has the key characteristics required for use in expandable (fire retardant) and expanded (gaskets, seals, and brake lining) applications”
• Infill Drilling:
  • Drilling completed for upgrade the Mineral resource estimate with a new JORC resource due in the coming months
• Tailings:
  • Tailings are to be replaced into the ground with separate sand and fines streams being pumped to a conventional tailings storage facility ready for backfilling in the rehabilitation.
  • Mud farming, as used by Rio Tinto at Weipa in Queensland, of the on the tailings storage accelerates dewatering reducing tailings volumes by 44%.
• Water:
  • Dry mining and mud farming cuts the scale of the water storage dam with water collected from the greater catchment area.
• Power:
  • Hybrid hydro-generated grid power plus solar power system solution.
  • Sovereign notes: “Malawi grid reliability has improved since completion of the PFS and is expected to further improve considerably with the commissioning of the country’s first HV transmission interconnector to Mozambique in Q2 2025.”
• Interim financials (A$) to end December:
  • Interest income $1m vs $1m yoy
  • Exploration cost $16.4 vs $5.0m yoy
  • Corporate & admin $0.8 vs 0.6m yoy
  • Business development $1m vs $1m yoy
  • Share based payment expenses $1.9m vs $1.1m
  • Pre-tax loss of $19.5 vs $7m yoy

Conclusion:  Management are making rapid progress towards publication of the DFS and the full financing of the Kasiya mine.

We are not aware of any other similar rutile projects in the world and would be surprised if Rio Tinto did not move to take control over the mining and finance of the Kasiya mine.

*SP Angel act as Nomad and broker to Sovereign Metals. The analyst has visited the Kasiya mine site. We highly recommend the Malawi coffee beans sold in Lilongwe airport.

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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