Today’s Market View – Scotgold Resources, Power Metal Resources, Kavango Resources and more…

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SP Angel . Morning View . Friday 02 07 21


Tin and cobalt prices continue to rise


Gold prices little changed ahead of US Non-Farm Payrolls




MiFID II exempt information – see disclaimer below – FCA looks to scrap MiFID research rules on small-caps in UK


Graphene producer funding – EIS scheme approval applied for


The company wishes to fund a ramp up in graphene production to get ahead of demand and to develop markets for a number of new, graphene products


The business is also able to upgrade graphite to a higher grade/specifications using its process – rolling out this process also requires funding


Please email if you wish to invest in the company


*SP Angel’s role is limited to making introductions and interested parties should be aware that investment in a private company can present certain risks not present in listed companies (e.g. limited or no liquidity and no rules compelling disclosure of information to investors). This offer is open to professional investors only and is not offered to retail investors.




Scotgold Resources* (LON:SGZ) – Cononish ramp up progress update


Power Metal Resources* (LON:POW) – Drill targets identified at Ditau Project, Botswana


Kavango Resources (LON:KAV)




EVs will gain market share quicker than previously thought


EV sales in the US, China and Europe will overtake all other engines five years sooner than previously expected according to new EY research.


Latest predictions show that by 2028 sales in Europe will surpass sales of other powertrains, a trend followed by China by 2033 and in the US by 2036.


The research also shows that by 2045, non-EV sales will account for <1% for overall vehicle sales.


In terms of sales volumes, Europe is predicted to lead the way until 2031 with China leading from 2032 to 2050.


As the global auto market recovers from the impact of COVID-19, many people who had previously chosen against car ownership have reassessed due to the pandemic:


Almost 1/3 of non-car owners planned to buy a car in the next six months (19% plan to buy new and 12% used


Among both current car owners and non-car owners, 30% said they would prefer to buy a non-ICE vehicle for their next purchase.




Battery metals companies in demand as IronRidge agrees US$102m investment proposal with Piedmont


Battery metals companies are being snapped up like free beers at an England, Germany football match.


Ganfeng, the world’s largest lithium processor offered to buy Bacanora Minerals for its lithium project in Mexico


SinoHydro (part of Power China) is working on due diligence on a potential deal with Kodal Minerals


Ganfeng has agreed a 50:50 deal with Firefinch on its Goulamina lithium project – next to Kodal’s Bougouni project.


Piedmont (US) has a agreed a similar 50:50 deal with IronRidge on its Ewoyaa lithium project in Ghana


There are relatively few, defined, lithium, hard rock (spodumene) projects left to do deals on


There are a number of lithium brine projects in Argentina and Chile that are dependent on the successful economic application of new Lithium Extraction technologies.


Most of these are not able to use large evaporation ponds to concentrate their brines either due to low evaporation rates or a lack of available flat land


Lithium brine projects in the high Atacama in Chile are also subject to approval from the government and opposition from indigenous peoples who are concerned at extraction levels.


Next metals / commodities / companies for potential takeover:


Graphite – Beowulf* (exploration in Finland), Alba (exploration), Tirupati (production in Madagascar)


Nickel – Amur Minerals* (World class project in Russia), Horizonte (projects in Brazil) , Kavango (exploring for nickel in Botswana)


Cobalt – Power Metals Resources (Kisinka project, DRC)


Vanadium – Bushveld Minerals* (operating mines in South Africa), Ferro-Alloy Resources


Tin – AfriTin (ramping up mine in Namibia), Cornish Metals (defining resources in Cornwall)


Manganese – Keras Resources* (Mine waiting on mining license to start)


Rare Earths – Rainbow Rare Earths*, Mkango Resources*, Pensana




Antofagasta and Chinese copper smelters agree TC in mid-$50/t


Miner Antofagasta and Chinese copper smelters have agreed on treatment charges for concentrate term supplies at a level in the mid-$50s per ton, according to Chinese sources.


Higher fees indicate that there is more concentrate supply from mines for refining in China.


Delivery dates covered by the contracts vary but include supplies from H2 2021 through 2022.


Fees are lower than the $60.8/t for 1H this year, but higher than the current spot TC of $42.5/t.


The deal between Anto and the smelters is around the minimum charge for refining copper in China, with the price floor set last week at $55/t.




Tin prices continue to hover at 10-year highs amid supply uncertainty


Tin posted its best first-half ever in H1, as the global economic recovery boosted demand for solder, while supply continued to tighten.


Prices on the LME are up 55% so far this year, the most since contracts started trading in 1989.


The demand for personal electronics in the pandemic has seen solder demand increase, with global semiconductor shipments rising 4% per year over the past decade.


On the supply side, Indonesian tin ore production fell by 15%, in China by 4%, in Myanmar by 21% and in Peru by 9%.


As a consequence, tin buyers have been drawing heavily on global stockpiles, with stock currently at 2,025t vs 3,480t this time last year.


Further weighing on supply, the world’s third largest tin supplier, the Malaysia Smelting Corp, has had restrictions placed on its smelting and mining operations indefinitely during Phase-1 of the National Recovery Plan.


MSC produces around 40,000t of tin ore annually, iks the sole tin smelter and the only industrial scale miner in Malaysia.




Dow Jones Industrials +0.38% at 34,634


Nikkei 225 +0.27% at 28,783


HK Hang Seng -1.88% at 28,287


Shanghai Composite -1.95% at 3,519




Economics


Donald Rumsfeld – RIP


“there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns–the ones we don’t know we don’t know.


“Simply because you do not have evidence that something exists does not mean that you have evidence that it doesn’t exist.”


Mr Rumsfeld – hopefully you are crossing off one of those known unknowns as you pass through the pearly gates, or is that an unknown unknown.




World – JP Morgan global composite 55.5 in June vs 56.0)




US – NFPs are due later today with estimates for hiring to have accelerated through June as economy recovers.


NFPs estimated at 720k v 492k in May amid improving unemployment rate (5.6% v 5.8%) and labour force participation rate (61.7% v 61.6%).


Reports released yesterday showed weekly jobless claims in the week to June 26 dropped more than expected on course to pre-pandemic levels.


Weekly Jobless Claims (‘000): 364 v 415 (revised from 411) in the previous week and 388 est.


US ISM – 60.6 in June vs 61.2 in May




China – Private sector manufacturing PMI pulled back more than expected in June posting the weakest reading in three months as growth momentum normalises in China.


Output expanded at the weakest pace in 15 months with companies highlighting the recent uptick in Covid-19 cases and supply chain challenges.


Total new order growth slowed as export sales stagnated.


Employment continued to increase with inflation pressures abating amid weaker growth in input costs.


Official manufacturing PMI 50.9 in June vs 51.0 in May


Caixin manufacturing PMI 51.3 in June vs 52.0 in May and 51.9 est.




EU – The EU launched EU Digital Covid Certificates yesterday allowing travellers who are fully vaccinated, recently tested or recovered from Covid-19 (6 months) to move across borders within the region without having to quarantine or undergo extra Covid-19 tests upon arrival.


Only vaccines recognised by the European Medicines Agency (EMA) are eligible although individual member states are free to accept other vaccines if they choose, Bloomberg writes.


Vaccines accepted by the EMA are Pfizer/BioNTech, Moderna, Johnson & Johnson as well as the version of the Oxford-AstraZeneca vaccine manufactured in the UK or Europe sold under the brand name Vaxzevria.


A version of the AstraZeneca vaccine called Covishield, produced by the Serum Institute of India (SII) is yet to receive approval in Europe.


The UK used the brand name Vaxzevria on all UK medical records for AstraZeneca vaccines, although up to five million doses were actually the Indian-made Covishield version.


The doses still can be identified by their batch numbers – 4120Z001, 4120Z002, 4120Z003 of the SIIPL COVID-19 Vaccine.


Manufacturing PMI 63.4 in June vs 63.1 in May


Unemployment pulled back to 7.4 from 7.3% Eurostat




UK – PM Johnson said extra precautions may be needed after July 19, the date targeted for withdrawal of Covid-19 restrictions, Bloomberg reports.


Manufacturing PMI 63.9 in June vs 65.6 in May




ASEAN – Manufacturing PMI 49.0 in June vs 51.8 in May




Japan – Manufacturing PMI 52.4 in June vs 53.0 in May


Tankan large manufacturing index rose to 14 in Q1 vs 5 in Q1,


Small manufacturing index -7 (-13)


Large nonmanufacturing index 1 (-1),




Taiwan – Manufacturing PMI 57.6 in June vs 62.0 in May




South Korea – Manufacturing PMI rose to 53.9 in June vs 53.7 in May




India – Manufacturing PMI 48.1 in June vs 50.8 in May




Australia – AIG manufacturing PMI 58.6 in June vs 60.4 in May




Russia – Manufacturing PMI 49.2 in June vs 51.9 in May




Turkey – Manufacturing PMI 51.3 in June vs 49.3 in May




South Africa – Manufacturing PMI 57.4 in June vs 57.8 in May




Poland – Manufacturing PMI 59.4 in June vs 57.2 in May




France – Manufacturing PMI 59.0 in June vs 59.4 in May




Brazil – Manufacturing PMI 56.4 in June vs 53.7 in May


Mexico – Manufacturing PMI 48.0 in June vs 47.6 in May




Germany – Retail sales rose 4.2% in May vs -6.8% in April and fell -2.4% yoy in May vs 5.1% yoy in April




Currencies


US$1.1826/eur vs 1.1853/eur yesterday. Yen 111.60/$ vs 111.23/$. SAr 14.514$ vs 14.248/$. $1.375/gbp vs $1.383/gbp. 0.746/aud vs 0.750/aud. CNY 6.483/$ vs 6.460/$.




Commodity News


Precious metals:


Gold US$1,777/oz vs US$1,777/oz yesterday


Gold ETFs 100.7moz vs US$100.8moz yesterday


Platinum US$1,094/oz vs US$1,080/oz yesterday


Palladium US$2,784/oz vs US$2,757/oz yesterday


Silver US$26.03/oz vs US$26.26/oz yesterday




Base metals:


Copper US$ 9,339/t vs US$9,394/t yesterday


Aluminium US$ 2,527/t vs US$2,511/t yesterday


Nickel US$ 18,055/t vs US$18,110/t yesterday


Zinc US$ 2,938/t vs US$2,980/t yesterday


Lead US$ 2,264/t vs US$2,263/t yesterday


Tin US$ 31,160/t vs US$31,135/t yesterday




Energy:


Oil US$75.7/bbl vs US$74.9/bbl yesterday


Aided by a robust global recovery and a disciplined OPEC+ production schedule, oil prices extended 10.78% higher in June, capping off an impressive three-month rally


OPEC+ will meet again today to announce the group’s August production target


Analysts are expecting the group to boost output by anywhere from 500,000 to 1MMbopd


However, some expect the group to remain more disciplined in the face of rising Covid cases across key economies, with the highly transmissible Delta variant being of notable concern


If that scenario plays out, being no increases announced for August, it would more than likely send oil prices significantly higher


The markets are likely taking a moderate approach between the forecasted production increases and none at all


That said, if a decision of 500,000bopd crosses the wires, oil prices may very well have a subdued reaction


Saudi Arabia will likely advocate for the supply side of the market to remain tight

Russia, on the other hand, prefers to send more oil into the market


Outside the initial reaction, and regardless of the OPEC+ decision altogether, prices will likely continue to trade higher through the summer months as demand continues to increase


That said, the Delta variant is quickly spreading and poses a serious threat to oil-hungry economic activity, particularly travel


Australia, among other countries, has seen another round of lockdowns enacted by policy makers


Governments are frantically moving to vaccinate their populations to avoid those economically crippling measures




Natural Gas US$3.665/mmbtu vs US$3.714/mmbtu yesterday




Bulk:


Iron ore 62% Fe spot (cfr Tianjin) US$203.0/t vs US$203.2/t


Chinese steel rebar 25mm US$754.6/t vs US$757.2/t


Thermal coal (1st year forward cif ARA) US$88.3/t vs US$87.5/t


Coking coal swap Australia FOB US$192.5/t vs US$174.0/t


China Ilmenite Concentrate TiO2 46% US$381.80/t vs US$382.65




Other:


Cobalt LME 3m US$50,500/t vs US$49,680/t


NdPr Rare Earth Oxide (China) US$73,814/t vs US$73,444/t


Lithium carbonate 99% (China) US$12,383/t vs US$12,383/t


China Spodumene Li2O 5%min CIF US$690/t vs US$690/t


Ferro-Manganese European Mn78% min US$1,938/t vs US$1,938/t


China Tungsten APT 88.5% FOB US$273/t vs US$273/t


China Graphite Flake -194 FOB US$515/t vs US$515/t


Europe Vanadium Pentoxide 98% US$8.9/lb vs US$8.9/lb


Europe Ferro-Vanadium 80% US$41.75/kg vs US$42.25/kg


Spot CO2 Emissions EUA $57.60/t vs $57.80/t




Battery News


Order placed for two of world’s largest wind turbine installation vessels


Danish wind turbine installation vessel (WTIV) Cadeler have placed an order with COSCO Shipping Heavy Industry to provide two of the world’s largest WTIVs at a cost of $651m, or $325.5m per vessel.


Construction of the two vessels is expected to begin immediately at COSCO’s shipyard in Qidong, China, for delivery in Q3 2024 and Q1 2025.


The vessels are expected to be the largest of their kind when completed. With a deck space of 5600sqm and a main crane capacity of 2000 tons, the vessels will be able to transport and install seven complete 15MW turbines per load, or 5 sets of turbines 20MW or greater.


The first of the two vessels has already been contracted by Siemens Gamesa for the installation of one hundred 14MW wind turbines for the ‘Sofia’ offshore windfarm at the Dogger Bank site in the UK North Sea.


The 14MW turbines are expected to be the largest wind turbines in the world at the time of their installation, measuring 252m tall from sea level.


“For the first commercial installation of what will be the largest offshore wind turbines in production, it is essential that the vessels be as cutting-edge as the machines themselves. We are confident that the X-class vessels from Cadeler will provide the outstanding load capacity, technological achievements, and overall energy efficiency gains we are counting on,” said Siemens Gamesa CEO Marc Becker.




EU considers adding ship emissions to carbon market


Ship owners could soon be forced to pay for shipping emissions of face bans from EU ports under draft plans to add shipping emissions to the carbon market. The proposal would add roughly 90 million tonnes of CO2 emissions to the EU emissions trading system, a slither of the EU’s overall greenhouse gas emissions of more than 3 billion tonnes.


The draft proposal would expand the carbon market to cover shipping emissions which would force owners to buy permits from the ETS when their ships pollute.


Under the draft EU plan, shipping would be added to the ETS gradually from 2023, when ship owners must surrender enough CO2 permits to cover 20% of their emissions. This would rise to 45% in 2024 and 70% in 2025 and from 2026, ship owners would need to surrender enough permits to cover 100% of their ETS-covered emissions.


If a shipping company failed to comply with the ETS for two years running, an EU country could issue an “expulsion order” to the EU to ban ships owned by the company from the bloc’s ports, the draft document said.




Ultra-fast battery energy storage just took a step closer to reality


An international research team, co-led by The University of Texas at Austin, have taken a step closer to building ultra-fast battery energy storage systems (LaboratoryEquipment.com).


The metal oxides used showed new ways of storing energy beyond classic electrochemical storage mechanisms in research published in Nature Materials.


Several metal compounds showed up to 3 x the energy storage capability vs materials commercially available lithium-ion batteries.


The team worked out how shows that extra charge is physically stored inside the materials via a space charge storage mechanism.


Extra energy is stored inside the metal oxides and at the surface of iron nanoparticles creating additional charge capacity


While it may take 5-10 years for this discovery to be input into commercial applications we reckon the new method for monitoring and measuring charge in elements will be quickly adopted to advance the rate of battery development.




Company News


Scotgold Resources* (LON:SGZ) 54p, Mkt Cap GBP30m – Cononish ramp up progress update


The Company provided operational update on ramping up of operations at the recently commissioned high grade Cononish gold mine in Scotland.


At the mine, development works continued with access to higher grade ore zones completed faster than anticipated.


Mining in this area will continue for the next two months and expected to provide a blended grade above 10g/t to the mill.


The team is trying to open up multiple mine faces to help flexibility of the underground operation.


Separately, the Company reports improved equipment utilisation rates after completed repairment of the underground haulage truck and established regular maintenance procedures.


At the plant, the ball mill reported a bearing failure that limited processing rates ramp up last month.


The issue is expected to be resolved in the coming days with management having now put production disruption mitigation procedures in place aimed at proactive identification of “one off issues” at the production site.


The team is planning a second gold concentrate shipment in the first half of July.


The Company is planning to continue providing regular monthly updates going forward including mine and plant ramp up progress as well as offering new CY21 production estimates in due course.


Conclusion: The Company is reporting good progress in underground development works at Cononish helping to improve flexibility of operations as well as access higher grade areas of the deposit. A mechanical issue at the mill limited ramp up progress at the plant last month, although, it is expected to be fixed in the coming days with further gold concentrate shipments are due in the next couple of weeks.


*SP Angel act as Nomad and broker to Scotgold Resources. A number of SP Angel analysts have visited the Cononish gold mine




Power Metal Resources* (LON:POW) 2.4p, Mkt cap GBP27m – Drill targets identified at Ditau Project, Botswana


Kavango Resources (KAV LN) 5.9p, Mkt cap GBP21.5m


(Ditau is held in a 50/50 Joint Venture with Kavango Resources and Power Metal Resources, with Kavango being the operator of the project)


The JV reports Geophysical and geochemical surveys completed on 12 targets areas has resulted in 7 specific drill targets identified.


Each target includes a possible carbonatite intrusive body lying within 300m depth and in range for RC drilling.


Falconbridge Explorations Ltd identified a large ring structure (KW2), located 23km to the north of Ditau. On drilling KW2, anomalous values of niobium were detected in carbonatite rock (REEs were not assayed for at the time).


KW2 is thought to be part of a cluster of carbonatites in the area in which Ditau is situated.


The JV has distinguished 3 of the 7 targets as ‘high priority’, defined as follows:


Target I1


A large, intense magnetic dipole that spans 17km x 8km.


Shallow to a depth to source of less than 100m, and lying at the intersection of two major regional fault zones.


Anomalous niobium values identified, with niobium, used in various superconducting materials and industrial alloys.


Target I4


Spans 7.5km x 5km


Shallow to a depth of less than 100m.


Target I10


Spans 2.5km x 2.8km


High AMT resistivity


Data processing and interpretation is in progress for the target, while an environmental management plan is in place.


Further surveys will be completed on the remaining 3 ring structure targets, with the JV proposing to drill the 3 top priority targets before the end of the year.


Samples from the drilling will be assayed for whole rock geochemistry and REEs.


Paul Johnson, Chief Executive Officer of Power Metal Resources PLC, commented: “It is extremely positive to be able to confirm high priority drill targets at Ditau in Botswana, particularly as the strategic objective is the discovery of Rare Earth Elements at a time when the world is seeking secure and safe supply sources.”


*SP Angel acts as Nomad and Broker to Power Metal Resources




Recent Interviews:


IGTV: Stock picks in the small-cap mining space: https://youtu.be/TxtMf6B2t8Q


Evolution of Chinese construction and implications for commodity demand: https://youtu.be/jB2nURL8uPw


VOX Markets: 30/06/21: https://audioboom.com/posts/7896916-john-meyer-on-amur-bluejay-bluerock-bushveld-rambler-rainbow


BBC: Catalytic converters https://www.bbc.co.uk/sounds/play/p09jl6c9


*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts.


We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate.




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




Analysts


John Meyer – [email protected] – 0203 470 0490


Simon Beardsmore – [email protected] – 0203 470 0484


Sergey Raevskiy [email protected] – 0203 470 0474


Joe Rowbottom – [email protected] – 0203 470 0486




Sales


Richard Parlons [email protected] – 0203 470 0472


Abigail Wayne – [email protected] – 0203 470 0534


Rob Rees – [email protected] – 0203 470 0535


Grant Barker – [email protected] – 0203 470 0471






SP Angel


Prince Frederick House


35-39 Maddox Street London


W1S 2PP




*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.




Sources of commodity prices




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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