SP Angel . Morning View . Tuesday 23 08 22Aluminium prices hold as Europe races towards energy ArmageddonMiFID II exempt information – see disclaimer below ASX:CPO* – Mapping programme refines four drill targets at Lana CorinaLON:EST – Interim report describes progress in KazakhstanLON:POW* – Drilling commences at Tati Gold Project in Botswana
SP Angel . Morning View . Tuesday 23 08 22
Aluminium prices hold as Europe races towards energy Armageddon
MiFID II exempt information – see disclaimer below
Culpeo Minerals Ltd (ASX:CPO)* – Mapping programme refines four drill targets at Lana Corina East Star Resources PLC (LSE:EST) – Interim report describes progress in Kazakhstan Power Metal Resources PLC (AIM:POW)* – Drilling commences at Tati Gold Project in Botswana Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF)* – Updated technical report indicates improvements in expected capital and operational costs. BUY – 51p Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF)* – BUY, 51p – Rainbow strike deal with OCP for Rare Earth processing of Moroccan phosphate residues Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* – New discovery at EZZ starts just 30m from UFZ infrastructure Talga Group* (ASX: TLG) – Talga battery day presentation in Oslow highlights plans for first EV Anode plant in Sweden
China lithium prices near record highs amid power squeeze
Energy - The only real solution to high energy prices is high energy prices
The enemy of my enemy is not my friend – as is so often the way in the Middle East
Aluminium market remains uncertain as producers cut output, while demand side worsens on property crisis
Dow Jones Industrials -1.91% at 33,064
HK Hang Seng -1.20% at 19,421
China – 200bn yuan ($29bn) offered to troubled developers
Europe - S&P Global Eurozone Manufacturing PMI edged lower to 49.7 in August of 2022 from 49.8 in July
UK – Money markets price in rates hitting 4% next year
Peru - Private investment in mining roughly halved to 10% from 19% in 2010 of Peru investment (Peru Institute of Economy)
US$0.9913/eur vs 1.0021/eur yesterday. Yen 137.10/$ vs 136.80/$. SAr 17.037/$ vs 17.031/$. $1.174/gbp vs $1.181/gbp. 0.687/aud vs 0.690/aud. CNY 6.863/$ vs 6.828/$.
US Dollar index – 109.17 / +0.11% on week
Gold US$1,737/oz vs US$1,739/oz yesterday
Gold ETFs 100.4moz vs US$100.4moz yesterday
Platinum US$877/oz vs US$885/oz yesterday
Palladium US$2,020/oz vs US$2,117/oz yesterday
Silver US$18.97/oz vs US$18.95/oz yesterday
Rhodium US$13,950/oz vs US$14,250/oz yesterday
Copper US$8,012/t vs US$8,064/t yesterday
Aluminium US$ 2,396/t vs US$2,392/t yesterday
Nickel US$ 22,343/t vs US$22,258/t yesterday
Zinc US$ 3,514/t vs US$3,499/t yesterday
Lead US$ 2,019/t vs US$2,057/t yesterday
Tin US$ 24,400/t vs US$24,750/t yesterday
Oil US$97.2/bbl vs US$95.1/bbl yesterday
Crude oil prices bounced off yesterday’s lows following comments from Saudi Oil Minister Prince Abdulaziz bin Salman that the disconnect between the futures market and supply fundamentals may force OPEC and its allies to act to tighten production when it meets next month.
Energy prices remain at record levels equivalent to ~$400/boe in the UK and ~$500/boe in Europe, with the Euro also falling below parity against the US dollar, on expectations of greater offshoring of European industrial and manufacturing capabilities to jurisdictions with cheaper energy prices (US HH trades at ~$60/boe).
Natural Gas US$9.925/mmbtu vs US$9.268/mmbtu yesterday
Uranium UXC US$48.95/lb vs US$49.00/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$101.3/t vs US$101.3/t
Chinese steel rebar 25mm US$611.7/t vs US$614.9/t
Thermal coal (1st year forward cif A RA) US$300.0/t vs US$300.0/t
Coking coal swap Australia FOB US$296.0/t vs US$286.0/t
Cobalt LME 3m US$49,455/t vs US$49,455/t
NdPr Rare Earth Oxide (China) US$96,603/t vs US$103,993/t
Lithium carbonate 99% (China) US$68,852/t vs US$68,767/t
China Spodumene Li2O 5%min CIF US$4,720/t vs US$4,720/t
Ferro-Manganese European Mn78% min US$1,215/t vs US$1,227/t
China Tungsten APT 88.5% FOB US$333/t vs US$333/t
China Graphite Flake -194 FOB US$815/t vs US$815/t
Europe Vanadium Pentoxide 98% 7.3/lb vs US$7.3/lb
Europe Ferro-Vanadium 80% 31.75/kg vs US$32.25/kg
China Ilmenite Concentrate TiO2 US$343/t vs US$345/t
Spot CO2 Emissions EUA Price US$94.7/t vs US$95.7/t
Brazil Potash CFR Granular Spot US$900.0/t vs US$900.0/t
International collaboration to develop battery-electric train fleet for UK
Hyundai to accelerate US EV plant to ensure vehicles qualify for incentives
Culpeo Minerals Ltd (ASX:CPO)* A$0.165, Mkt cap A$9.6m – Mapping programme refines four drill targets at Lana Corina
*An analyst at SP Angel holds shares in Culpeo Minerals
East Star Resources PLC (LSE:EST) 4.4p, Mkt Cap £8.2m – Interim report describes progress in Kazakhstan
Power Metal Resources PLC (AIM:POW)* 1.65p, Mkt Cap £25m – Drilling commences at Tati Gold Project in Botswana
*SP Angel acts as nomad and broker to Power Metal
Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF)* 11.4p, Mkt cap £60m – Updated technical report indicates improvements in expected capital and operational costs. BUY – 51p (Rainbow hold 70% of Phalaborwa with 30% to be held by Bosveld Phosphates) (Neodymium Nd, Praesidium Pr, Terbium Tb, Dysprosium Dy. Rainbow holds 100% of the Gakara mine and associated licenses in Burundi)
Conclusion: The work outlines in the updated process flow sheet combined with Rainbow’s new agreement with OCP in Morocco enable the group to diversify its operations and multiply its scale of production. Today’s news indicates improvements in expected capital and operational costs enabled by the use of conventional processes and equipment and simplification of the flowsheet.
Rainbow has published a technical report on the Phalaborwa processing flowsheet on their website at: https://www.rainbowrareearths.com/investors/results-reports-presentations/
*SP Angel acts as financial advisor and broker to Rainbow Rare Earths
Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF)* 11.4p, Mkt cap £60m – Rainbow strike deal with OCP for Rare Earth processing of Moroccan phosphate residues BUY – 51p (Rainbow hold 70% of Phalaborwa with 30% to be held by Bosveld Phosphates) (Neodymium Nd, Praesidium Pr, Terbium Tb, Dysprosium Dy. Rainbow holds 100% of the Gakara mine and associated licenses in Burundi)
Valuation: We value Rainbow’s Phalaborwa project at 43p/s based on a $204m capex assumption for the Phalaborwa project. While we are not able to assess the value of the OCP / UM6P master agreement at this stage but we can see multiple upside opportunity from a deal with a producer of this scale. OCP produce 41mt of phosphate in 2020 exporting some 10mt of raw material. The group produced 7mt of phosphoric acid for fertilizers with 1.9mt of this exported. OCP Group sales rose 50% yoy to $8.8bn in 2021.
Conclusion: The Master Agreement should work to develop the extraction of REEs from phosphorgypsum and/ or their phosacid lived stream in Morocco , similar to the MoU Rainbow signed with a major chemical producer in SA in June to extract RE’s from their live phosacid stream, using technology developed by K-Tech and Rainbow which is being applied by Rainbow to the Phalaborwa project in South Africa. This gives Rainbow another project and further country diversification creating a multi project RE company reducing risk etc. In a world where China produces >80% of global rare earths, the development of new sources of the critical rare earths seems essential for global security and the ability to re-shore manufacturing to the West . The deal also enables Rainbow to operate on phosphogypsum residues in a stable jurisdiction outside South Africa.
*SP Angel acts as financial advisor and broker to Rainbow Rare Earths
Rambler Metals and Mining PLC (AIM:RMM, TSX-V:RAB)* 21.75p, Mkt Cap £33m – New discovery at EZZ starts just 30m from UFZ infrastructure
Conclusion: Rambler continues to discover new zones of copper and gold mineralisation within easy reach of the existing underground mine with the new Ezekiel Zone being the third such discovery so far this year. Wide intersections of grades exceeding 2% copper in the new areas of mineralisation should enable management to create additional working faces to expand flexibility and optionality on production.
*SP Angel act as Nomad and Broker to Rambler Metals & Mining. An SP Angel analyst holds shares in Rambler Metals & Mining.
Talga Group* (ASX: TLG) A$1.3 Mkt Cap A$396m – Talga battery day presentation in Oslow highlights plans for first EV Anode plant in Sweden
*SP Angel used to act as UK broker to Talga Resources. SP Angel analysts have formerly visited the leading battery R&D institution WMG partnering with Talga.
No.1 in Copper: “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”
No1. In Gold: “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”
The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
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
Joe Rowbottom – Joe.Rowbottom@spangel.co.uk - 0203 470 0486
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
*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.
Gold, Platinum, Palladium, Silver - BGNL (Bloomberg Generic Composite rate, London) Gold ETFs, Steel - Bloomberg Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt - LME Oil Brent - ICE Natural Gas, Uranium, Iron Ore - NYMEX Thermal Coal - Bloomberg OTC Composite Coking Coal - SSY RRE - Steelhome Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite - Asian Metal
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