URU Metals* (LON:URU) 170p, Mkt cap £2.8m – Interim results
(URU Holds a 74.82% stake in Zeb Nickel Corp which holds the Zebediela Nickel project in South Africa)
URU has released its results for the six months to 30th September 2021.
URU reported a loss of $794k vs $1.81m last year.
SP Angel . Morning View . Friday 31 12 21
Lithium prices continue to rise as gigafactories fight for material
GRIFFIN MINING (AIM:GFM) (GRIFFIN MINING (AIM:GFM)) – Chinese New Year and winter Olympics cause Griffin’s zinc mine to shutdown till 14 of March
Keliber (private) – €7m grant from Business Finland for lithium plant
Kore Potash (Kore Potash PLC (AIM:KP2, ASX:KP2, JSE:KP2)) – SP Angel appointed as Nomad and broker to Kore Potash
Phoenix Copper* (Phoenix Copper Ltd (AIM:PXC, OTCQX:PXCLF)) – NED/CTO steps down
URU Metals* (URU Metals Ltd (AIM:URU)) – Interim results
IGTV: IG Outlook 2022, 23/12/21:: https://youtu.be/4w7nbjRdFyk
interactive Investors: FTSE 100 favourite stock: https://youtu.be/BomNRQJt-YA
2022 outlook: https://youtu.be/SxMPiPEc_Rg
Three small-cap mining share tips for 2022: https://www.youtube.com/watch?v=9xvA_3UXXYQ&ab_channel=interactiveinvestor
VOX Markets: 08/12/21: https://audioboom.com/posts/7993202- china-economy-plus-bluejay-centamin-cornish-metals
*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.
We wish you a mild-Covid-and Happy New Year
UK government advice is to go out and have fun, preferably outside to reduce the dosage of coronavirus being contracted.
The advice is on the assumption of having had the first two vaccines plus the booster vaccine.
UK infections rates continue to skyrocket with 188,124 Covid cases yesterday.
UK hospitalisation are at 9,466 with 850peple in intensive care.
The figures increasingly support the view the AstraZeneca vaccine is giving better longer term protection through the activation of T-cells and other elements in the immune system as the AstraZeneca and Johnson & Johnson (NYSE:JNJ) Covid vaccines are a more traditional vaccine made from a deactivated adenovirus which effectively delivers instructions on elements of the Covid spike protein to the immune system, triggering an immune response.
Base and battery metals shine in ‘score card’ for 2021
Gold -4%
Silver -12%
Copper +25%
Nickel +25%
Lead +15%
Zinc +28%
Tin +93%
Spodumene Australia FOB +291%
China graphite flake +68%
China Neodymium-praseodymium oxide +107%
Lithium carbonate 99.5% delivered China + 320%
Omicron is likely to cause significant disruption to logistics, mine production and manufacturing through January and February
It is looking increasingly likely that China is struggling to contain the Omicron variant.
But, with so many businesses shutting down to reduce pollution for the Winter Olympics in China now may be the best time to allow the virus to spread.
However, it remains to be seen if China’s Sinovac vaccine is as effective at reducing Covid to a mild illness as the AstraZeneca jab.
We see significant potential for metal prices to spike higher in Q1 as a result of potential shortages due to Covid disruption.
Covid hits deliveries of Ford’s new Mustang Mach-E in China
Deliveries of Ford’s new Mustang Mach-E are being delayed in China due to the suspension of production at its supplying battery plant in Xi’an due to Covid
Six field engineers for the Ford Mustang Mach-E program have been quarantined in the city according to autohome.com.cn.
The cars cost around $49,000 for the rear-wheel drive, long-range version.
We suspect we will see increasing news on factory suspensions
Copper – Codelco signs multi-year sales contracts in Southeast Asia
Chilean firm Codelco has finalised deals for long-term sales contracts with Southeast Asia starting in 2022. (Reuters)
Codelco is the world’s largest copper producer and announced this year plans to quadruple sales to Southeast Asia by 2023.
The company reports copper premiums in China rising 20% with Taiwan and South Korea premiums rising more than 20%.
Codelco expects refined copper demand in Southeast Asia to ‘show sustained growth for the next 20 years.’
Zijin Mining has started production at the Qulong copper mine in Tibet, targeting 120,000tpa to start.
China’s Smelters Purchase Team (CSPT) have agreed Q1 rate of US70/tonne and 7cents (Q1’21 $53/0.053).
Antofagasta has agreed Tc/Rcs of $65/t and 6.5c/lbs with a Chinese smelter
Las Bambas copper mine to restart in Peru in the new year following deal with community groups along transport routes to and from the mine.
The mine suspended operations on 18 December and is likely to restart sometime next week.
Las Bambas is one of Peru’s largest mines, supplying 2% of the world’s coper and contributing 1% to Peru’s GDP.
Aluminium jumps as additional smelters shut on soaring power prices
LME aluminium has climbed an additional 0.5% to $2,824/t whilst Shanghai aluminium up 4%.
Alcoa (NYSE:AA) announced it has halted production at its San Ciprian smelter for 2 years.
Alro, the Romanian aluminium smelter has cut production by 60% due to high European energy prices
Norsk Hydro has announced plans to slash output to 60% of full capacity.
Analysts expect further long-term closures as high energy prices reduce incentives for smelters to retain full production.
China’s state-asset regulator has called on state-owned firms to slash energy consumption per 10k yuan to of output value by 2025 to 15% lower than pre-2020 levels. (Reuters)
Dow Jones Industrials -0.25% at 36,398
Nikkei 225 Closed at 28,792
HK Hang Seng +1.24% at 23,398
Shanghai Composite +0.57% at 3,640
Economics
US – Dallas Fed manufacturing index fell to 8.1 in December vs 11.8 in November
Richmond Fed manufacturing index rose to 16 in December vs 12 in November
Chicago PMI rose to 63.1 in December vs 61.8 in November
weekly jobless claims pulled back to 198,000 from 206,000 previously
Currencies
US$1.1310/eur vs 1.1310/eur yesterday. Yen 115.15/$ vs 115.16/$. SAr 15.898/$ vs 15.960/$. $1.351/gbp vs $1.347/gbp. 0.726/aud vs 0.726/aud. CNY 6.373/$ vs 6.373/$.
Commodity News
Precious metals:
Gold US$1,816/oz vs US$1,800/oz yesterday
Gold ETFs 97.8moz vs US$97.8moz yesterday
Platinum US$965/oz vs US$969/oz yesterday
Palladium US$1,949/oz vs US$1,963/oz yesterday
Silver US$23.12/oz vs US$22.67/oz yesterday
Rhodium US$14,100/oz vs US$14,100/oz yesterday
Base metals:
Copper US$ 9,696/t vs US$9,675/t yesterday
Aluminium US$ 2,817/t vs US$2,820/t yesterday
Nickel US$ 20,685/t vs US$20,450/t yesterday
Zinc US$ 3,521/t vs US$3,516/t yesterday
Lead US$ 2,283/t vs US$2,295/t yesterday
Tin US$ 39,245/t vs US$39,030/t yesterday
Energy:
Oil US$79.7/bbl vs US$79.0/bbl yesterday
Natural Gas US$3.669/mmbtu vs US$3.906/mmbtu yesterday
Uranium UXC US$43.70/lb vs $43.70/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$119.4/t vs US$119.5/t
Chinese steel rebar 25mm US$740.8/t vs US$741.6/t
Thermal coal (1st year forward cif ARA) US$123.0/t vs US$123.0/t
Thermal coal swap Australia FOB US$156.8/t vs US$156.8/t
Coking coal swap Australia FOB US$352.0/t vs US$352.0/t
Other:
Cobalt LME 3m US$70,500/t vs US$70,500/t
NdPr Rare Earth Oxide (China) US$132,081/t vs US$132,039/t
Lithium carbonate 99% (China) US$41,503/t vs US$40,404/t
China Spodumene Li2O 5%min CIF US$2,560/t vs US$2,560/t
Ferro-Manganese European Mn78% min US$1,804/t vs US$1,804/t
China Tungsten APT 88.5% FOB US$315/t vs US$315/t
China Graphite Flake -194 FOB US$805/t vs US$805/t
Europe Vanadium Pentoxide 98% 8.7/lb vs US$8.7/lb
Europe Ferro-Vanadium 80% 32.75/kg vs US$32.75/kg
China Ilmenite Concentrate TiO2 US$384/t vs US$384/t
Spot CO2 Emissions EUA Price US$83.3/t vs US$83.3/t
Company News
Griffin Mining (GRIFFIN MINING (AIM:GFM)) 91p, Mkt cap £158m – Chinese New Year and winter Olympics cause Griffin’s zinc mine to shutdown till 14 of March
Griffin Mining reports that mining and milling operations ceased on the night shift last night, with operations set to reopen on the 14th of March 2022.
The Chinese new year holiday runs from Monday 31st January to 6th February though many take a longer break in China.
The break is complicated this year by the Winter Olympics which run from Friday 4th February to Sunday 20th February, followed by the paralympic games.
Chairman Mladen Ninkov commented, “As forewarned in October of this year, the mining and milling operations will remain closed for the Chinese New Year holiday period, the Winter Olympic Games and Paralympic Games and re-open on the 14th March 2022. This will, obviously, cause a bleak financial first quarter for the Company in 2022.”
Keliber (private) – €7m grant from Business Finland for lithium plant
Business Finland has granted Keliber Technology Oy investment funding of a maximum €7m to be used for the acquisition of technology that significantly improves environmental protection in lithium hydroxide production.
Keliber plans to build its lithium chemical plant at Kokkola Industrial Park, and the production process will be based on novel soda leaching technology which Keliber says saves energy and promotes the circular economy.
The production process will result in analcime sand as a side stream and it is planned to use this in the extension work at the Port of Kokkola.
The grant from Business Finland promotes the development of a sustainable battery industry in Finland and supports the EU-level transition to low-emission transport.
Beowulf Mining* through its wholly-owned subsidiary, Grafintec, is aiming to be a leading supplier of anode material for lithium-ion battery manufacturing in Finland.
Grafintec is focused on establishing an anode materials production facility while simultaneously developing its portfolio of graphite exploration assets in-country.
This multifaceted development within the graphite space allows Grafintec to provide security of supply and contribute to Finland’s ambitions of achieving battery manufacturing self-sufficiency.
Grafintec recently signed a JV with Epsilon Advanced Materials to develop an anode materials production facility.
The Head of Terms for the JV stipulate that the plant will be built in two phases, Phase 1 with a production capacity of 10,000tpa and Phase 2 which will add 40,000tpa, taking overall plant capacity to 50,000tpa of anode material.
Earlier this year, Beowulf received €791k in funding form Business Finland as part of the BATCircle2.0 (Finland-based Circular Ecosystem of Battery Metals), which reflects the quality of Grafintec’s operations in Finland and demonstrates how highly the project is regarded by Business Finland.
*SP Angel acts as Nomad and Broker to Beowulf Mining
Kore Potash (Kore Potash PLC (AIM:KP2, ASX:KP2, JSE:KP2)) 0.89p, Mkt cap £30m – SP Angel appointed as Nomad and broker to Kore Potash
Kore Potash has appointed SP Angel to act as its Nomad and broker on the AIM market in London.
The company is working towards the development of the Kola Potash Project in the Sintoukola Basin of the Republic of Congo.
Kore also holds the Dougou Extension Sylvinite project
Management are working optimising the Kola Potash Project and so far remain on track to present a financing proposal for the full Kola construction costs in Q1.
The optimisation has identified and is considering 53 potential capex opportunities including a possible relocation of the processing plant closer to the mine area and 41 potential plant optimisations as well as possible mining and infrastructure savings.
The process plant optimisations include eight potential modifications to the layout, 21 chances to improve the design and equipment selection and 12 initiatives related to the MOP ‘muriate of potash’ product produced, processing reagent management and MoP product storage.
The team are also looking to reduce costs for ship loading, storage and transport.
The current proposal is to produce 2.2mtpa of MOP product over a 33 years mine life
This gives a NPV of US$1.45bn assuming a 10% discount rate and an IRR of 17.2% from a pre-production capital investment of US$2.10bn including US$495m for the process plant.
The figures suggest the project may potentially be the lowest cost MOP supplier into Brazil.
SQM recently nominated Pablo Hernandez Mac-Donald as their representative Non-Executive Director to the Kore Potash Board
Mr MacDonald holds degrees in Industrial Engineering and Master of Science in Engineering.
Key shareholders include; SQM at 20.15%, OIA 23.23%, Harlequin Investments 12.34% and Dingyi Group Investments 8.12% as of 21 January.
MOP prices rose in August to $221/t, though this is still lower than the $265/t seen through much of 2019.
We expect MOP prices to jump higher following the recently imposed US sanctions on Belaruskali’s marketing arm Belarus Potash Company (BPC), in retaliation for the migration crisis on the EU-Belarus border.
The sanctions mean that US companies have to wind down business dealings with Belarus Potash by April 2022, the deadline to end all business dealings with BPC, as well as with its subsidiary Agrorozkvit.
BPC is the country’s main foreign currency earner and accounts for 16% of global production.
Belaruskali is the world’s second largest producer of the crop nutrient after Nutrien and expects to produce 12.5mt this year.
The sanctions are expected to lend further support to the potash price, which is already at a 13-year high.
Conclusion: Kore Potash looks well placed to benefit from the development of higher prices in potash markets as well as on the advancement of its Kola Potash and Dougou Extension Sylvinite projects.
*SP Angel act as Nomad and broker to Kore Potash from 1st January 2022
Phoenix Copper* (Phoenix Copper Ltd (AIM:PXC, OTCQX:PXCLF)) 53p, Mkt Cap £62m – NED/CTO steps down
(Phoenix holds 80% of the Empire mining property in Idaho)
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Phoenix reports that that Roger Turner is stepping down as a Non-Executive Director and Chief Technical Officer with immediate effect, for personal and health reasons.
Mr Turner will continue to advise the Company on a part-time consultancy basis.
Marcus Edwards-Jones, Chairman of Phoenix Copper, commented: “I sincerely thank Roger for his invaluable input over the last 8 years, since founding the Company in 2013. Roger’s wisdom and experience have been instrumental in much of what we have achieved over that period and I am delighted that he will remain involved with the Company, albeit in a part-time consultancy role.”
*SP Angel acts as nomad to Phoenix Copper
URU Metals* (URU Metals Ltd (AIM:URU)) 170p, Mkt cap £2.8m – Interim results
(URU Holds a 74.82% stake in Zeb Nickel (TSX-V:ZBNI) Corp which holds the Zebediela Nickel project in South Africa)
URU has released its results for the six months to 30th September 2021.
URU reported a loss of $794k vs $1.81m last year.
Administrative expenses fell to $273k vs $302k last year.
During the period URU successfully completed the disposal of the Zebediela Nickel Project to Zeb Nickel Corp and the project remains the primary focus of URU, through its 74.82% interest in Zeb Nickel Corp – with URU continuing as technical operator of the project.
The company looks forward to commencing with the 3,600 m diamond exploration drilling program, which is scheduled to commence in H2 2021.
The aim of this program is to improve the confidence in the historical NI43-101 compliant resource, as well as explore for higher grade nickel sulphide mineralisation.
URU submitted all the required documentation to the South African Department of Mineral Resources necessary to obtain a Mining Right.
The company looks forward to updating the market with news flow emanating from the drilling program on Zebediela, as well as receiving a granted Mining Right from the DMRE.
*SP Angel acts as Nomad and Broker to URU Metals
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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 – John.Meyer@spangel.co.uk – 0203 470 0490
Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484
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Sales
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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.
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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