Today’s Market View – Rio Tinto, Hummingbird Resources, Cora Gold and more…


SP Angel . Morning View . Friday 22 10 21

Rio Tinto warns of substantial lithium supply gap

Gold continues rally on weak dollar and inflation expectations

Beowulf Mining* (LON:BEM) – Concept mining study completed at Kallak North

Chaarat Gold (LON:CGH) – Convertible Loan Note extended by a year to Oct/22

Cora Gold (LON:CORA) – Drilling results from Sanankoro

Hummingbird Resources (LON:HUM) – Equipment availability at Yanfolila pulls back Q3 production

Rio Tinto (LON:RIO) – Alan Davies cleared by the Australian Securities and Investments Commission

Recent interviews

VOX Markets: 20/10/21:

IGTV: 08/10/21: How high energy prices are pushing up metals:

Lithium – Rio Tinto warns of looming lithium gap, stating 60 Jadar mines not enough

Rio’s $2.4bn Jadar lithium project was greenlighted in July and hopes to power 1mn EVs.

Rio’s head of economics stated that, with 55% of light vehicles set to be EVs by 2030, 3mt of lithium will be required.

EVs currently consume 350,000t of lithium pa.

The company sees current committed supply and capacity expansions contributing a mere 15% of demand growth over the next 5 years.

85% of required demand will have to come from new projects according to the economist.

The presentation states that ‘filling the supply gap will require over 60 Jadar projects.’

Rio expects the Jadar mine to produce 58,000t of lithium carbonate, 160,000t of boric acid and 255,000t of sodium sulphate pa.

Rio also doesn’t expect battery recycling to make a relevant contribution to EVs until 2040.]

Gold continues rally on weak dollar and inflation expectations

Gold has extended gains for a 1.4% rise this week.

Spot gold hit $1,793.11/oz whilst US futures hit $1,794.20/oz.

Silver is on track for a 5th week of consecutive gains, hitting $24.28/oz.

The US dollar is set for a 2nd week of losses, with the dollar index failing to pass 94, settling c. 93.71 points having hit 92.32.

Gold has been held back by US bond yields and the market expectation of a bond-buying taper before January.

Inflation, Interest rates, Inventory restocking, Covid-19 and Supply chain disruption

UK – BoE chief economist warns UK inflation could hit 5% early next year

UK inflation is likely to rise “close to or even slightly above 5%” early next year, the Bank of England‘s new chief economist, Huw Pill, has warned.

Mr Pill declined to disclose how he would vote at the BoE Monetary Policy Committee’s November 4 meeting.

UK CPI dipped 1pp in September to 3.1%, although the BoE has forecast inflation to exceed 4% by the end of the year.

Pill also commented that he expects inflation to come back down in the second half of 2022.

Financial markets are betting on a BoE interest rate rise as early as next month, with BoE governor Andrew Bailey commenting that the central bank would “have to act” to keep a lid on inflation.

Unilever warns of a once in two decades inflationary event

Unilever has warned of inflation in almost every household product category (The Times).

The firm has raised prices by 4.1% in the past three months to offset huge inflationary pressures.

Palm oil prices have risen 82% in two years due to labour shortages in Indonesia while Soya bean oil has risen by around 66%.

Restocking: Sudden inventory restocking across the board from retailers to manufacturers has stretched supply chains raising transport costs

Raw material supply issues have tightened markets at a time of massive inventory restocking for stimulus projects, services companies and consumer growth

A recent dip in the UK inflation rate to 3.1% from 3.2% should defer a decision on higher interest rates indicating that higher inflation may well be a temporary phenomenon.

Policymakers are also cautions over the potential to stall the economic growth which has cost so much to restart.

Vaccinations and new treatments may have reduced the risk of death by Covid but rapidly rising Covid cases, coupled with predictions for the ‘flu’ this winter look likely to cause ongoing disruption in the labour market and potential for further localised lockdowns.

Day 3 – Borehole drilling four ground-source heating near Oxford

The weather has suddenly turned cold with temperatures halving from unusually mild weather with Autumn leaves pouring off the trees.

We are now onto our second hole in our four hole drilling program for our Oxford hovel and all was going so well until the water pump failed half way through the day.

Work was again interrupted when the casing supporting the top of the hole slipped requiring the entire drill string to be withdrawn so another piece could be added.

The casing, as with everything on this job was secured with several turns of Duck tape which generally does the job.

As with all trades, it is these important little tricks that make all the difference.

Am going to buy shares in a duck tape manufacturer before this job is done, it seems to get used for everything.

A commendation to the Millard Skips driver who arrived just in time to deliver a new skip and cart away 6m3 of clay. The driver insisted on pumping water out of the skip to avoid spillage of water with clay over the roads.

Dow Jones Industrials -0.02% at 35,603

Nikkei 225 +0.34% at 28,805

HK Hang Seng +0.33% at 26,103

Shanghai Composite -0.36% at 3,582


China – Evergrande makes overdue $83.5mn payment on dollar bonds but still owes $20bn

China state-owned Securities Times has reported that Evergrande has delayed a potential default by making the $83.5m payment to dollar bond holders.

The payment comes 1 day before the 30-day grace period ends and a default notice could have been issued.

Evergrande still has outstanding dollar debt of $20bn.

Evergrande has another grace-period deadline on October of $45mn and may still struggle to meet its commitments.

A $4.7bn, 8.75% Evergrande bond due in 2025 was trading at 20.5c last night, signalling the expectation for default.

Nomura estimating debts of over $5 trillion for the sector with China Fortune Land, Fantasia, Sichuan Languang, Sinic and Oceanwide all defaulting on payments.

New contracts signed with home buyers fell 20-30% in September y-o-y as buyers stand back from the market and banks take a more cautious stance on mortgage lending.

Evergrande’s contracted sales fell from $28.5bn in Sept/Oct. 2020 to $572mn in same period 2021.

China’s land sales, 20% of local government income, fell 11.15% in value in September, y-o-y.

August sales fell 17.5%

US – President Biden committed to defending Taiwan from Chinese attack in latest comments

Biden answered ‘yes’ in a CNN town hall on Thursday when asked if he could pledge to protect Taiwan.

Biden: “I don’t want a Cold War with China – I just want to make China understand that we are not going to step back, we are not going to change any of our views”

A White House spokesperson said that the US would continue to uphold its commitment under the Taiwan Relations Act, support Taiwan’s self-defence and oppose unilateral changes to the status quo.

UK retail sales fall unexpectedly for fifth straight month

The volume of goods sold in stores and online fell 0.2% last month, with economists forecasting a 0.5% expansion, according to the ONS.

The fall in sales is the longest period of consecutive monthly declines on record and came despite panic buying for fuel during a supply crisis.

Shanghai aluminium slides 7% on falling coal prices

Shanghai November aluminium falls 7.6% to $3,361.27/t.

3-month LME aluminium fell 1.1%, having fallen 5.5% yesterday.

Tight aluminium prices have eased as China’s thermal coal futures fell another 13%.

Aluminium production has been heavily limited by China’s power curbs.

Shanghai aluminium stocks hit their highest since May 27 at 957,000t.

However, there are few signs of Beijing easing power curbs on aluminium smelters for the time being.

Copper – Codelco reaches union agreement with Salvador mine workers

State-owned Chilean miner Codelco, the world’s largest copper producer, has reached a 36-month agreement with its union.

Workers will not get salary raises but will receive a $4,980 bonus.

80% of union members supported the agreement.

The Salvador mine produced 56,300t of copper in 2020.


US$1.1636/eur vs 1.1638/eur yesterday. Yen 114.05/$ vs 114.00/$. SAr 14.657/$ vs 14.484/$. $1.379/gbp vs $1.379/gbp. 0.749/aud vs 0.748/aud. CNY 6.393/$ vs 6.401/$.

Commodity News

Precious metals:

Gold US$1,792/oz vs US$1,782/oz yesterday

Gold ETFs 98.3moz vs US$98.5moz yesterday

Platinum US$1,057/oz vs US$1,049/oz yesterday

Palladium US$2,034/oz vs US$2,085/oz yesterday

Silver US$24.29/oz vs US$24.17/oz yesterday

Rhodium US$14,000/oz vs US$14,000/oz yesterday

Base metals:

Copper US$ 9,907/t vs US$9,959/t yesterday

Aluminium US$ 2,885/t vs US$3,065/t yesterday

Nickel US$ 19,980/t vs US$20,720/t yesterday

Zinc US$ 3,418/t vs US$3,600/t yesterday

Lead US$ 2,401/t vs US$2,418/t yesterday

Tin US$ 37,000/t vs US$37,650/t yesterday


Oil US$84.0/bbl vs US$85.1/bbl yesterday

While still strong, oil prices are poised for their first weekly dip in seven weeks as demand for oil products in power generation cooled off amid easing coal and gas prices, while a forecast for a mild US winter also weighed on the market

Winter weather in much of the US is expected to be warmer than average, according to a National Oceanic and Atmospheric Administration forecast

The market hit multi-year highs earlier in the week on worries about coal and gas shortages in China, India and Europe, which spurred fuel-switching to diesel and fuel oil for power

Crude oil’s sharp rise may also make it vulnerable to profit taking, however, a substantial correction may not happen unless global energy crisis subsides

US crude found support earlier this week on news of low crude stocks at the major Cushing storage hub in Oklahoma

There are clear concerns over the inventory drain that we are seeing at the WTI delivery hub

US Energy Information Administration data on Wednesday showed crude stocks at Cushing fell to 31.2MMbbls, their lowest level since October 2018

US crude stocks fell by 431,000bbls in the week to 15 October to 426.5MMbbls, compared with analysts’ expectations in a Reuters poll for a 1.9MMbbl rise

U.S. gasoline stocks fell by a more-than-expected 5.4MMbbls to 217.7MMbbls, the lowest since November 2019, according to the EIA, while distillate stocks fell to levels not seen since April 2020

Natural Gas US$5.183/mmbtu vs US$5.115/mmbtu yesterday

European natural gas prices fell on expectations that mild and windy weather will provide some relief to the region’s strained energy system

Warm temperatures at the start of the heating season are set to temper demand, pushing prices lower despite signals from Russia that the country will not transport more gas without quick approval of its controversial Nord Stream 2 pipeline

In its October Short-Term Energy Outlook, the US Energy Information Administration forecasts that natural gas spot prices at the US benchmark Henry Hub will average US$5.67/mmbtu between October 2021 and March 2022, the highest winter price since 2007-2008

The increase in Henry Hub prices in recent months and in the forecast reflect below-average storage levels heading into the winter heating season and strong demand for US LNG, even after relatively slow growth in US natural gas production

The EIA expects Henry Hub prices will decrease after the first quarter of 2022, as production growth outpaces growth in LNG exports, and will average US$4.01/mmbtu for the year

US exports of LNG are establishing a record high this year, a new record high anticipated for next year

The EIA expects LNG exports to average 9.7Bcf/d this year (3.2Bcf/d more than the 2020 record high of 6.5Bcf/d) and to exceed annual pipeline exports of natural gas for the first time

The year-on-year increase in LNG exports coincides with slight growth in US natural gas production

US dry natural gas production is expected to average 92.6Bcf/d this year, which is 1.1Bcf/d more than in 2020 but 0.3Bcf/d less than in 2019

Uranium UXC US$48.9/lb vs $48.9/lb yesterday


Iron ore 62% Fe spot (cfr Tianjin) US$116.3/t vs US$123.7/t

Chinese steel rebar 25mm US$896.1/t vs US$894.8/t – Mexican steelmaker AHMSA explores bankruptcy options for subsidiary over power contracts

AHMSA is looking to file for Chapter 11 bankruptcy protection of its subsidiary Minera del Norte.

The unit has been hit by the cancellation of key coal contracts by Mexico’s Comision Federal de Electricidad, limiting power stations.

Thermal coal (1st year forward cif ARA) US$118.5/t vs US$136.8/t

Thermal coal swap Australia FOB US$190.0/t vs US$213.0/t

Coking coal swap Australia FOB US$362.0/t vs US$361.0/t


Cobalt LME 3m US$56,545/t vs US$56,545/t

NdPr Rare Earth Oxide (China) US$99,335/t vs US$97,147/t

Lithium carbonate 99% (China) US$26,985/t vs US$27,261/t

China Spodumene Li2O 5%min CIF US$1,270/t vs US$1,240/t

Ferro-Manganese European Mn78% min US$2,159/t vs US$2,101/t

China Tungsten APT 88.5% FOB US$314/t vs US$312/t

China Graphite Flake -194 FOB US$575/t vs US$565/t

Europe Vanadium Pentoxide 98% 7.9/lb vs US$7.9/lb

Europe Ferro-Vanadium 80% 31.25/kg vs US$31.25/kg

China Ilmenite Concentrate TiO2 US$386/t vs US$385/t

Spot CO2 Emissions EUA Price US$67.5/t vs US$68.1/t

Company News

Beowulf Mining* (BEM LN) 5.3p, Mkt cap GBP55.5m – Concept mining study completed at Kallak North

Beowulf have provided a comprehensive update at its Kallak North operation in Sweden.

Beowulf employed Carci Mining Consultants to complete a concept mining study for Kallak North, which showed that the mine could produce approximately 2.7mtpa of concentrate over an initial 15 years.

Carci note the potential for a longer life mining operation, when considering Kallak South and the Company’s exploration ground further south, which have both additional defined iron ore mineralisation and an Exploration Target.

In May 2021, Beowulf reported the results of a Mineral Resource Estimate upgrade for Kallak that proved an initial 19mt or iron ore equating to a 12.5% increase in the resource.

Beowulf has a M&I Resource of 132mt @ 27.8% Fe, and an inferred resource of 39mt @ 27.1% Fe.

Demand for a high-grade, local product is forecast given projects such as HYBRIT and more specifically H2 Green Steel, which could justify a ramp up in operations at Kallak to meet demand.

Results of the mining study will form the basis for discussions with The Swedish Transport Agency, the Inland Railway and emerging fossil-free steel producers in Norrbotten.

Beowulf notes how important securing resources is for the future of transport infrastructure in the north of Sweden as part of the transition to a Green Economy/European Green Deal.

With regards to permitting, the Swedish Constitutional Committee (KU) which has previously reviewed the Swedish Government’s handling of the Company’s Kallak application and criticised the Government in late 2020, has initiated a new review of minerals permitting which includes the Kallak case.

As well as Kallak, Beowulf has also been making progress at other projects, with CEO Kurt Budge commenting: “Since the last Company announcement over a month ago, I have spent a week in India visiting Epsilon Carbon, including its production facilities in Karnataka State, and was able to discuss our joint plans to develop an anode materials plant in Finland. I also visited Finland last week for meetings regarding Grafintec’s business, and, as mentioned previously, I was in Sweden earlier in the month.”

“In Kosovo, we are still waiting for final approval of Vardar’s licence applications. The appointment by the Kosovan Government of new members to the Independent Commission on Mines and Minerals (“ICMM”) Board, the body that administers mineral licence permitting in Kosovo, renews licences and issues new licences, is still to be completed. The Company is now discussing plans with Vardar for a Winter drilling programme to catch-up on some of the lost time this year.”

Conclusion: The mining study completed by Carci reaffirms the viability of Kallak North to supply iron ore, to steel producers in Sweden. Given the high-grade of the deposit and the proximity to green steelmaking facilities, in our opinion Kallak should be seen as a strategically vital project which could provide iron ore to steel mills in a way which sees the carbon footprint of Swedish-made steel is kept to a minimum.

*SP Angel acts as nomad and broker to Beowulf Mining

Chaarat Gold (LON:CGH) 22.9p, Mkt Cap GBP158m – Convertible Loan Note extended by a year to Oct/22

The Company announced yesterday it extended secured convertible loan notes from 31 October 2021 to 31 October 2022.

As part of the extension, the Company agreed to lower the conversion price from 37p to 30p.

Interest rate that was left unchanged at 12% and will be paid in a single payment upon maturity of the note in Oct/22 provided that no conversion or early repayment has occurred.

As of 31 October 2021, the principal notes’ amount outstanding stood at $19.7m plus an accrued interest of $6.7m.

Conclusion: Renegotiated convertible loan notes terms alleviate immediate liquidity pressures and allows the Company to focus on finalising Tulkubash project funding.

Cora Gold (LON:CORA) 13.5p Mkt Cap GBP33 – Drilling results from Sanankoro

Cora Gold has released the last of the results from its 40,000m drilling programme on its Sanankoro gold project in southern Mali which complete the 2021 resource definition drilling for the Zone B1 deposit.

The company says that resource and metallurgical core drilling “has confirmed that Zone B1 has extremely deep weathering with shallow oxide densities measured to depths of 190m vertically, down-dip within the ore zone oxidation trough”.

Among the results highlighted in today’s announcement are:

A 17m wide intersection at an average grade of 17.13g/t gold from a depth of 89m in hole SC0561; and

A 19m wide intersection averaging 6.14g/t gold from 59m depth in hole SC0565; as well as wider, lower grade intersections including

A 73m wide intersection averaging 0.71g/t gold from a depth of 95m in hole SC0557; and

54m averaging 0.83g/t gold from 120m in depth in hole SC0558.

The company says that the Zone B1 resource “remains open in all directions … [and that] … An updated mineral resource estimate (‘MRE’) is expected in the coming weeks”.

The company’s website contains a link to SRK’s December 2019 mineral resources estimate for Sankoro Sanankoro Mineral Resource Estimate ( which shows a total inferred estimate of 5mt at an average grade of 1.6g/t gold (265,000 contained oz). Approximately 40% of the resource (108,000oz in 1.8mt at an average grade of 1.8g/t gold) is reported from Selin which is the largest of the Sanankoro deposits including Zone A (91,000oz), Zone B (47,000oz) and Zone B North (19,000oz).

Saying that “this drill campaign has delivered consistently positive results” CEO, Bert Monro, said that the next step would be the new mineral resources estimate and he confirmed that “There have also been a number of DFS site visits over the last month with numerous concurrent work streams ongoing”.

Hummingbird Resources (LON:HUM) 17p, Mkt Cap: GBP68m – Equipment availability at Yanfolila pulls back Q3 production

Hummingbird Resources reports that as a result of its’ mining contractor at Yanfolila experiencing equipment availability issues during the 3 months ending 30th September gold production for the quarter fell back to 22,102oz (Q2 2021 – 24,494oz) resulting in year to date output of 69,377oz and the company announcing that its “full year production is forecast to be at the lower end of the guidance range of 100,000 – 110,000 oz, and AISC at the upper end of the guidance range of US$1,250 – 1,350 per oz of gold”.

The company confirms that “Mitigation measures are being implemented with our mining contractor … [and that] … all other things being equal, meeting this forecast is based on the mitigation measures, … being successfully implemented … bringing mining volumes back to contracted levels”.

The measures to improve equipment availability include additional maintenance on the existing excavators to maximise availability as well as “Reviewing regional options for additional excavator capabilities” and the company says that “the operation is moving into some of the higher-grade parts of the ore bodies for the year in Q4”.

Gold production resulted from the treating of approximately 392kt of ore at an average grade of 2.27g/t gold (Q2 2021 – 443kt at a grade of 2.14g/t) while maintaining recovery rates at 91.95% compared to 91.88% during the preceding quarter.

Exploration drilling in and around Yanfolila amounted to 6,750m mainly “on Sainamoule East (“SE”) and Sainamoule West (“SW”) extensions, in addition to greenfield drilling at the Kama and BBC deposits”.

Hummingbird has also provided additional information on recent drilling at its Kouroussa gold development project in Guinea where it forecasts production averaging around 100,000ozpa of gold at an all-in-sustaining cost of US$90-1,000/oz over a minimum mine life of seven years, with between 120-140,000ozpa for the first three years of operations.

Project capex of US$97.5m for a 1mtpa plant is expected to deliver an NPV of US$210m at a gold price of US$1,750/oz.

Among the drilling results from Kouroussa highlighted today are:

An intersection of 24m averaging 7.37g/t gold from a depth of 23m in hole KRC1754; and

18m averaging 3.71g/t gold from a depth of 51m in hole KRC1780; as well as

A number of narrower intersections reporting grades in the range of 4g/t to as high as 37.11g/t over a width of 5m at 82m depth in hole KRC 1776.

The company says that the 2021 infill drilling progrmme at Kouroussa is focused on converting approximately 160,000 -180,000 ounces (‘oz’) of the current in-pit inferred material to indicated” resource status”.

CEO, Dan Betts said that the latest results “continue to show the high level of prospectively in the Siguiri Basin where the Kouroussa mine licenses are situated and the reason why there is significant activity within the region. Our near-term drilling goals at Kouroussa focus on converting the maximum amount of resources into reserves before we commence production in 2023”.

Murray Paterson, Chief Geologist, said that the drilling is “providing excellent geological information which will help refine our geological model of the deposit for future mining and exploration. Importantly these drill holes are intersecting the inferred mineralisation where it was interpreted to be in the current MRE model. We are seeing numerous examples of visible gold that is highly encouraging and a sign of the overall excellent geological potential at Kouroussa”.

Rio Tinto (LON:RIO) 4,724p, Mkt cap GBP77bn- Alan Davies cleared by the Australian Securities and Investments Commission

ASIC has cleared Alan Davies over allegations of a US$10.5m payment to a political adviser in Guinea while working for Rio Tinto.

Davies was tipped to be in the running to become a future CEO at Rio Tinto when an unnamed source close to situation leaked emails relating to the payment to political adviser Francois de Combret.

Jean-Sebastien Jaques became CEO of Rio Tinto shortly after but has since left the board following the blowing up the ancient indigenous Juukan Gorge rock shelters.

The emails showed Alan Davies referred the $10.5m payment through various layers of Rio Tinto management for approval including Sam Walsh and Tom Albanese who was ceo at the time.

ASIC has concluded there is insufficient evidence to show Davies has broken the law and no further enforcement action will be taken. ASIC have also decided not to take action against Rio Tinto or any of its executives over the matter in Guinea.

We look forward to the UK SFO in the UK following suit and not spending any more tax payer funds on the case.

However AISC is investigating Rio Tinto over the slow disclosure of problems relating to Rio’s acquisition of Riversdale Mining in Mozambique for A$3.9bn which were later sold for $50m.

Alan Davies is currently CEO of Moxico Resources PLC*, a private copper mining company operating in Zambia which plans to list on the LSE next year. Watch this space!

*The writer holds shares in Moxico Resources PLC

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


Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt


Oil Brent


Natural Gas, Uranium, Iron Ore


Thermal Coal

Bloomberg OTC Composite

Coking Coal




Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite

Asian Metal


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