Today’s Market View – Aura Energy; Bacanora Lithium; Caerus Mineral Resources; Eurasia Mining; Kodal


SP Angel . Morning View . Thursday 26 08 21

Copper holds above $9,000/t as markets eye Jackson Hole meetings


MiFID II exempt information – see disclaimer below

Aura Energy* (LON:AURA) – Completion of gravity survey at Tasiast South and confirmation of water-well drilling at Tiris

Bacanora Lithium (LON:BCN) – Ganfeng recommended cash offer update

Caerus Mineral Resources (LON:CMRS) – Trouli to be first project for the joint-venture with Bezant Resources

Eurasia Mining* (LON:EUA) – Nyud progress update

Kodal Minerals* (LON:KOD) – Final results highlight strong progress at Bougouni

Polymetal (LON:POLY) -Iincrease to capex forecasts due to inflation fears

Dow Jones Industrials -+0.11% at 35,406

Nikkei 225 +0.06% at 27,742

HK Hang Seng -1.67% at 25,265

Shanghai Composite -1.08% at 3,502

Beijing announces latest round of inspection teams as part of widespread environmental audit on metals industry

China’s environment ministry announced yesterday plans for inspection teams to audit 5 provinces and 2 state-run metal firms.

The news comes as China looks to ramp up controls over excessive emissions from smelters and mills.

Provinces of Jilin, Shandong, Hubei, Guangdong and Sichuan will all be inspected by teams.

China National Gold Group Corp will be inspected alongside China Nonferrous Metal Mining Group (CNMC) according to the Ministry of Ecology of Environment.

The ministry described the measures as ‘necessary to carefully verify, resolutely rectify and effectively solve the prominent ecological and environmental problems reported by the masses.’

Both Shandong and CNMC have copper-smelting units in the country, with Shandong China’s top aluminium producer.

Chilean state miner Codelco breaks ground at $1.4bn copper mine expansion

Codelco, the world’s no. 1 copper producer, has broken ground at its Salvador mine, which it expects will extend the mine life by 47 years and ramp up output by close to 50%.

Named the Rajo Inca project, the aging underground mine will be converted to an open pit.

President of Codelco’s board of directors stated ‘the new Salvador will obtain all the contribution of the mineral from a single open pit, with copper grades 40% higher than the current ones, which will influence the increase in production and productivity’.

The new expansion comes as a saving grace to the outdated mine, which was expected to run out of ore by the end of this year.

Full production of the Rajo Inca project is expected to begin in 1H 23.

Copper supply in Chile is currently a concern owing to the number of aging projects in the country.


US – Fed officials are preparing for virtual Jackson Hole meeting to take place over Thursday-Saturday.

Durables Goods Orders (%mom): -0.1 v 0.8 (revised from 0.9) in June and -0.3 est.

Durables ex Transportation (%mom): 0.7 v 0.6 (revised from 0.5) in June and 0.5 est.

UK – Car production plummets to 65-year low amid chip shortage and ‘pingdemic’

UK carmakers only made 53,438 vehicles in July, down 38% YoY and the lowest for the month of July since 1956.

In addition to the chip shortage paralyzing many parts of the global car market, a wave of workers have been ‘pinged’ by the NHS covid app, requiring isolation.

EU – The European Union will discuss today whether to reinstate restrictions on visitors from the US as new cases climb, Bloomberg reports.

The number of cases in the US has been climbing lately as more curbs being lifted with 507 new cases per 100k inhabitants recorded in the first two weeks of August.

Current EU guidelines designate countries as safe to travel if those recorded less than 75 new cases over the last 14 days.

Germany – Consumer confidence ticked lower in September underperforming expectations on rising Covid-19 cases and accelerating inflation.

“Prices have been rising rapidly since the middle of this year. This has a dampening effect on the consumer mood,” GfK consumer expert Rolf Buerkl said in a statement.

GfK Consumer Confidence: -1.2 v -0.4 (revised from -0.3) in August and -0.5 est.

Siemens Energy pauses project to develop power generation in Afghanistan following Taliban takeover of the country, Bloomberg writes.

The Company signed an agreement with previous Afghan administration in November last year.

Only 28% of local population is reported to have access to electricity.

Australia – New South Wales post record +1,000 daily infections driven by an outbreak of delta variant in Sydney.

Stay-at-home orders at NSW are being extended until at least September 10.


US$1.1765/eur vs 1.1738/eur yesterday. Yen 110.15/$ vs 109.77/$. SAr 15.004/$ vs 14.966/$. $1.374/gbp vs $1.372/gbp. 0.725/aud vs 0.725/aud. CNY 6.484/$ vs 6.477/$.

Commodity News

Copper slides as investors wait for tomorrow’s Fed meeting

An easing in copper prices this morning is expected to be the result of speculators waiting for signs of a policy tightening from J Powell’s Fed at the Jackson Hole symposium this weekend.

3M LME copper fell 0.2% to $9,336.50/t.

The October contract for Shanghai Futures Exchange slid 0.4% to 69,000y/t.

A tapering of US monetary stimulus would limit copper’s attractiveness to investors expecting a slowing of the US’ economic recovery.

The copper price would also be negatively impacted by a further rise in the dollar, making the red metal more expensive to holders of alternative currencies.

Supply concerns could negate the impact somewhat, with a strike at BHP’s Cerro Colorado copper mine in Chile being planned by the worker’s union there.

Iron ore futures up a further 3% on optimism of China steel demand

Dalian ore futures have risen for 4th consecutive day, with SGX iron ore back above $150/t.

The most traded iron ore October contract on the Singapore Exchange rose 3.3%.

The price of the steelmaking ingredient has been buoyed by limited Covid cases in China, prompting hopes of a continued economic recovery.

Analysts have also pointed to the recent slump in iron ore prices causing improved profit margins for steelmakers, encouraging a ramp up in production.

Commodity strategists at ANZ have pointed to ‘an acceleration in local government bonds’ as ‘stoking hopes of stronger steel demand in coming months.’ 600bn y worth of notes were sold last week by local authorities, with bond sales typically used for infrastructure projects.

Taliban open to Russia exploiting Afghanistan’s natural resources, Russian ambassador says

Russia’s ambassador to Kabul, Dmitry Zhirnov, stated that the Taliban will allow Russia’s involvement in developing Afghanistan’s natural resources.

Russian news agency TASS quoted Zhirnov saying: ‘the Taliban is open to our participation in (Afghanistan’s) economy, including the development of natural resources’.

Afghanistan is estimated to contain natural resources valued at a range between $700bn – $1tn, with world leading reserves of copper, lithium, and rare earths – all vital components of the transition to electrification.

China is also expected to vie for influence over the Taliban’s new resource wealth, with Beijing officials offering diplomatic avenues to Afghanistan’s new ‘government’.

Precious metals:

Gold US$1,785/oz vs US$1,793/oz yesterday

Gold ETFs 99.8moz vs US$99.9moz yesterday

Platinum (AIM:ZERO) US$991/oz vs US$996/oz yesterday

Palladium US$2,405/oz vs US$2,430/oz yesterday

Silver US$23.66/oz vs US$23.70/oz yesterday

Base metals:

Copper US$ 9,270/t vs US$9,374/t yesterday

Aluminium US$ 2,595/t vs US$2,619/t yesterday

Nickel US$ 18,810/t vs US$19,210/t yesterday

Zinc US$ 2,992/t vs US$3,020/t yesterday

Lead US$ 2,273/t vs US$2,299/t yesterday

Tin US$ 32,885/t vs US$32,555/t yesterday


Oil US$72.0/bbl vs US$71.1/bbl yesterday

Oil prices slipped in early trading today for the first session this week as renewed concerns about demand amid rising COVID-19 infections cut short a three-day rally, and as production returned in Mexico

Fresh outbreaks fuelled by the delta variant of the coronavirus are raising concerns about the strength of the economic recovery globally, hitting demand for oil and other commodities

Helping to boost prices around 10% through Wednesday, US crude inventories fell last week for a third consecutive week while overall fuel demand increased to the most since March 2020 according to the Energy Information Administration (EIA)

The headline draw was welcome news but a steep drop in crude exports and lacklustre jet fuel demand prevented prices from extending gains

Distillate stockpiles, which include diesel and jet fuel, rose last week, gaining 0.6MMbbls to 138.46MMbbls, against expectations for a 0.3MMbbl drop, according to the EIA data

Oil stocks dropped by 3MMBbbls in the week to 20 August, a little above an analysts’ expectation in a Reuters poll for a 2.7MMbbl drop

At 432.6MMbbls, crude stocks were at their lowest since January 2020

Gains this week in prices have been helped by a major outage in Mexico, where a fire on Sunday on an offshore platform killed at least five workers and knocked out over 400,000bopd of production

Natural Gas US$3.922/mmbtu vs US$3.888/mmbtu yesterday


Iron ore 62% Fe spot (cfr Tianjin) US$153.4/t vs US$148.8/t

Chinese steel rebar 25mm US$808.3/t vs US$809.9/t

Thermal coal (1st year forward cif ARA) US$106.5/t vs US$107.0/t

Coking coal swap Australia FOB US$199.5/t vs US$211.0/t

China Ilmenite Concentrate TiO2 US$366.3/t vs US$366.7/t


Cobalt LME 3m US$50,430/t vs US$51,500/t

NdPr Rare Earth Oxide (China) US$94,228/t vs US$94,734/t

Lithium carbonate 99% (China) US$16,501/t vs US$16,368/t

China Spodumene Li2O 5%min CIF US$910/t vs US$900/t

Ferro-Manganese European Mn78% min US$1,747/t vs US$1,744/t

China Tungsten APT 88.5% FOB US$305/t vs US$305/t

China Graphite Flake -194 FOB US$525/t vs US$525/t

Europe Vanadium Pentoxide 98% 9.6/lb vs US$9.6/lb

Europe Ferro-Vanadium 80% 39.75/kg vs US$39.75/kg

Spot CO2 Emissions EUA Price US$64.9/t vs US$64.8/t

Battery News

Battery maker CATL considers stake in DRC cobalt miner

CATL is considering buying a minority stake in Chinese miner Jinchuan Group in the hopes of securing supplies of key battery metals, according to Chinese sources.

Ningde, a subsidiary of CATL, is reportedly in initial discussions with Jinchuan about acquiring roughly a 10% stake in the miner.

Jinchuan operates projects in the DRC and produced 4,200t of cobalt and 30,500t of copper content in concentrates in 2020.

The miner is currently developing the Musonoi project in the DRC which is expected to produce 7,400t of cobalt and 38,000t of copper.

CATL supplies batteries to automakers such as Tesla, and controls about 30% of the world’s EV battery market.

Company News

Aura Energy* – (LON:AURA) 5.25p, Mkt Cap GBP20.8m – Completion of gravity survey at Tasiast South and confirmation of water-well drilling at Tiris

Aura Energy has now completed its gravity survey covering the Tasiast South licence areas in Mauritania where the company is exploring for both gold and for battery metals.

The company says that the “gravity data allows better definition of geology, the identification of structures likely to be of relevance to gold deposition and the possibility of direct detection of sulphide mineralisation on the nickel/cobalt targets”.

Describing the area surveyed as “some of the best greenstone belt targets in the world” Managing Director, Peter Reeve, said that the “gravity survey provides valuable data which will guide future exploration”.

He clarified that “The area is one of almost no outcrop and the gravity survey is expected to define the greenstone belt, lithologies and structures permitting the planning of follow-up bedrock sampling and deeper drilling”.

The data is currently undergoing further processing and analysis and, in conjunction with exiting drilling and aeromagnetic information, will inform the future exploration strategy.

Among the areas covered by the survey is the Nomads joint-venture area where “Aura is earning a 70% interest” and the company explains that there has been “no meaningful exploration despite it covering 50 km2 of Archean greenstone belt located 35 km directly along strike from Kinross’ giant +20 Moz[1] Tasiast Gold Mine, which is currently being mined at a rate of +400,000 oz gold a year”.

As well as the news on the gravity survey, Aura Energy confirms that water-well drilling is now underway at its Tiris uranium project, also in Mauritania.

The company expresses confidence that the new drilling “will continue the previous results from Water Drilling undertaken by Aura in 2019” which located “Substantial water located within the Oued el Foule Depression”. Adequate water will help to ensure that production at Tiris, where the company recently published an updated estimate of DFS level costs, “can be expedited”.

Conclusion: Results from Aura Energy’ gravity survey at Tasiast South will help guide future exploration of the greenstone belts in an area of very restricted rock outcrop while the resumption of water-well drilling for the Tiris uranium project should ensure that project development remains on track

Bacanora Lithium (LON:BCN) 67p, Mkt Cap GBP256m – Ganfeng recommended cash offer update

Ganfeng and the Company reached an agreement on the terms of a recommended cash offer (first announced 6 May/21) for all shares that of Bacanora that are not already owned by Ganfeng.

Under the offer Bacanora shareholders will receive 67.5p in cash, a premium of 50% to the closing price on 5 May/21.

Additionally, Bacanora will distribute its current interest in Zinnwald to all existing shareholder (including Ganfeng) in specie subject to a number of conditions.

Zinnwald shares (~0.24 shares per one Bacanora share) represent an additional 9.0% of value to be distributed to Bacanora shareholders over the cash consideration under the offer.

Bacanora currently holds 35.5% interest in Zinnwald Lithium (ZNWD LN, Mkt Cap GBP65m), an AIM-listed lithium developer, that owns a 100% interest in the Zinnwald lithium project in Germany.

The project hosts a lithium bearing mica deposit with an estimated mineral resource of 40mt at 0.76% Li2O for ~760kt LCE, representing an across the border extension of the Cinovec deposit developed by European Metals in Czech Republic.

Ganfeng is one of the world’s largest lithium compounds producers and currently owns 50% of the Sonora Lithium Project directly as well as holds 28.9% interest in Bacanora

“We have been working with Bacanora on the Sonora Lithium Project for over two years and we look forward to progressing what we believe to be a significant lithium project through its construction phase to production, targeted in 2023,” Ganfeng commented on the announcement.

Caerus Mineral Resources (LON:CMRS) 24.5p, Mkt Cap GBP11.1m – Trouli to be first project for the joint-venture with Bezant Resources

Caerus Minerals confirms that the Trouli project in Cyprus will be the first project undertaken under its joint-venture agreement with Bezant Resources which gives Bezant exclusivity to assess the Caerus projects for a period of 18 months and move to project development of any selected projects with Bezant leading the “design, finance, construction and operation phases of an open-pit or underground mining operation” and Caerus recouping its expenditure from 70% of project cash flow.

The Trouli project comprises three licences, Troulli, Kokkinapetra and Anglesides, in an area of volcanogenic massive sulphide (VMS) mineralisation which was previously worked, most recently during the mid-20th century, and was subject to intermittent exploration “until 1974, when the then-operator Geominco was forced to close its plant and operation following the Turkish invasion”.

Caerus and Bezant representatives are to hold site meetings to review the project during the first two weeks of September.

Chief Executive, Martyn Churchouse, said that “The opportunity to spend time on-site with our partners reviewing the Troulli Project in detail will be invaluable”.

Conclusion: Despite a previous production history in region known for copper mining since antiquity, Trouli has been largely unexplored since the mid-1970s as a result of political events in Cyprus. We look forward to news as modern exploration methods are deployed to re-evaluate the area.

Eurasia Mining* (LON:EUA) 16p, Mkt Cap GBP450m – Nyud progress update

The Company provides an update on one of the deposits subject to the Rosgeo JV over assets in the Kola Peninsula, Russia.

The Company and Rosgeo signed an agreement pursuant to which Yuksporskaya Mining Company, a wholly owned subsidiary of Eurasia, will hold a 75% interest in the Nyud open pit PGM and battery metals deposit.

Eurasia has an option to acquire the remaining 25% upon completion of a JORC compliant CPR on Nyud.

At Nyud, drilling was recently completed funded by Rosgeo while Wardell Armstrong, a well known global full service mining consultancy, to prepare the CPR.

Conclusion: The team is progressing the recently signed Rosgeo JV (Mar/21) that covers nine PGM and battery metals deposits with an estimated >100moz PtEq in Russian Code compliant reserves and resources to grow the scale of the Company’s asset base with drilling and CPR related works carried at the Nyud deposit.

*SP Angel act as Nomad and Broker to Eurasia Mining

Kodal Minerals* (LON:KOD) – 0.35p, Mkt cap GBP54m – Final results highlight strong progress at Bougouni

Kodal reported a loss of GBP623k for the year ended 31st March 2021 vs GBP630k last year.

Administrative expenses fell to GBP513k vs GBP590k last year.

Exploration expenditure fell to GBP542k vs GBP1.6m.

Cash position of company was GBP2.4m vs GBP0.33m. The Group’s cash balances at 20 August 2021 were GBP3,248,876.

Highlights for the year include the completion of the Bougouni Lithium project feasibility study that demonstrated the potential for a robust mining operation with attractive economic fundamentals.

Post period, Kodal progressed Bougouni to the final stage of the approval process, with the project suitably ratified by the relevant authorities in Mali, with further news expected in due course.

Bougouni lithium project key stats:

220,000tpa of 6% spodumene concentrate over an initial 8.5 years

71% recovery rate of contained lithium based on laboratory metallurgical recoveries of 75%;

>USD$1.4bn of total revenue at $680/t starting H2 2021 and rising 2%pa

2mtpa throughput with DMS and conventional flotation circuit. Recoveries are acceptable with the DMS on its own.

USD$431/t C1 cash costs or USD$466/t inc. royalties and sustaining capital.

US$117m Capex est. plus contingency:

1.7 year payback est.

LoM production of 1.94mt of concentrate. Sales >$1.4bn assuming spodumene concentrate sales price of $680/t increasing 2% year-on-year;

58% IRR pre-tax

51% IRR post tax

US$300m NPV7% pre-tax

US$200m NPV7% post-tax

Kodal expect the timely receipt of the mining license at Bougouni, which is currently passing through its final approvals. This is the final approval needed for the project to be fully permitted for development.

Meanwhile, pit optimisation and further evaluation of the processing flowsheet are underway in attempts to further enhance the project fundamentals.

Kodal has also made progress at its gold licenses, both within the period and post-period, expanding its portfolio through the acquisition of the Fatou project in December 2020. Fatou has a 350,000oz NI 43-101 resource with potential for further resource expansion on further drilling.

Dabakala (Ivory Coast): Kodal also report assay results from the Dabakala which show up to 1.97g/t in surface sampling. The project shows some form of continuity in high-grade gold anomalism over 11km x 3km with multiple trends relating to geological structures and contacts.

Nielle (Cote d’Ivoire) Kodal reported number of wide intersections of gold mineralisation in drilling at the Nielle project in the Ivory Coast from 12 RC holes covering 1,285m confirm gold zones and target extensions >1,000m with mineralisation open at depth and along strike.

Highlights include:

33m grading 2.33g/t gold from 3m depth

including 6m at 7.99g/t gold from 6m

12m grading 5.96g/t gold from 6m

including 6m at 11.45g/t gold from 6m

Going forward, Kodal intend to focus on bringing the Bougouni project into production given the very positive market outlook for lithium, while also progressing its portfolio of highly prospective gold projects in West Africa.

*SP Angel acts as Financial Advisor and Broker to Kodal Minerals

Polymetal (LON:POLY) 1,493p, Mkt Cap GBP7,214m – increase to capex forecasts due to inflation fears

The Russian gold and silver producer Polymetal is planning to ramp up investment on its silver projects to take advantage of high prices.

By increasing capex in 2021, Polymetalis aiming to protect itself against inflation in the coming years.

The company’s revenue is up 12% to $1.27b year on year in 1H21.

The mining giant plans to invest $675-725m, an increase from $560m, citing ‘continuing macroeconomic pressures’, specifically materials and wage inflation, as the reason.

The firm is also concerned over the costs of the feasibility study for its POX-3 project as well as going forward with its Veduga and Prognoz projects.

Polymetal feels it is on track to meet its 2021 production forecasts of 1.5m oz of gold equivalent.

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 – [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


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


*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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