SP Angel . Morning View . Tuesday 02 03 21
 

Copper pulls back despite concentrate supply disruption in China

Ferro-vanadium prices continue to rise in China as other metals step back

 

Alba Mineral Resources (LON:ALBA) – Results from Clogau St David’s mine

Altus Strategies* (LON:ALS) – Drilling at Tabakorole returns good close to surface gold intersections

Castillo Copper (LON:CCZ) – Strategy to recommence mining at the Big One deposit

Mkango Resources* (LON:MKA) – Flotation pilot plant test-work completed

Serabi Gold* (LON:SRB) – US$17.5m fund-raising

Shanta Gold (LON:SHG) – Strong FY20 results highlight significant deleveraging with the Board announcing final dividend

 

Copper – Long liquidation of positions in copper, oil and other metals have served to temper the exuberance of copper prices

Demand remains strong as many Chinese manufacturers continued to work through the new year as restrictions dampened holiday travel plans

The number of traders running net long positions pulled back by 14% in February as prices rose to new highs

Disruption to concentrate supply cause smelters to fight for available supply causing spot TC/RC rates fall to $41.5/t in China vs $59.5/t for 2021

This disruption will likely have a knock-on effect to refined copper supply in an already tight market.

Maybe China will relax the rules for importing copper scrap, which Maersk stopped shipping to China last July due to customs import issues.

China had planned on banning all solid waste imports including scrap metal by the end of last year.

 

China – Wary of the cost and risk presented by asset bubbles in overseas markets

A leading regulatory official has expressed concern over the risk presented by asset bubbles in foreign markets ahead of the US Stimulus moving to the Senate.

While Chinese manufacturers are likely to benefit from the US stimulus package it is interesting to see their authorities are concerned over the asset price inflation it might cause.

The comments may also indicate/mask that China is likely to take action against local traders pushing copper futures prices to high level.

The cost of copper is seen as inflationary for transport infrastructure, housing and electric vehicle manufacture as well as adding to the cost of air conditioners and other appliances

China remembers the cost and disruption caused by the Subprime mortgage crisis which developed into the Global Financial Crisis after the collapse of Lehman Bros.

Warren Buffet’s comments on equities being better than bonds exacerbated the bond market sell-off sending the 10-year Treasury yield to a year high of 1.614%.

The 10-year yield has pulled back to 1.4273% but looks set to rise further partially driven by Buffet’s sentiment.

China is looking to stabilise its domestic market in the event of a potential asset price collapse which probably relates to the US Tech and bond markets.

 

Recent Interviews:

IGTV:  Are we in a new commodity supercycle, or is one coming? https://youtu.be/sw6gLNnM1s0

Is this a new Supercycle for commodities: https://youtu.be/BIWb-wqoLpM

Metals expected to continue the last-year gains into 2021 https://youtu.be/afrB9cJe8L0

Is 2021 the start of the new COVID-Supercycle or will Lockdowns delay the recovery? https://youtu.be/7LO0tDc-pNc

 

VOX Markets: 24/02/20
https://www.voxmarkets.co.uk/articles/john-meyer-mining-talks-about-copper-bluejay-empire-metals-phoenix-copper-rainbow-rare-earths-rambler-metals-mins-tirupati-graphite-feb-24-1-18-pm-3b5e4d3

11/02/20 https://audioboom.com/posts/7803378-john-meyer-covers-arc-mins-cornish-metals-rambler-rainbow-rare-earths-mkango-bluejay

 

121 Conference panel:  Investment Leader’s Discussion: Van Eck, Qora Capital, Nedbank, SP Angel

 

iiTV:     Mining stock to own 2021: https://www.youtube.com/watch?v=4x7SuSLQwCI&t=11s.

Mining share tips for 2021 – https://www.youtube.com/watch?v=G_6RKAp91k4

*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.

 

Metals price forecasting through 2020 – 2020 was probably the most difficult year for forecasting anything

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

 

Dow Jones Industrials +1.95% at 31,536

Nikkei 225 -0.86% at 29,408

HK Hang Seng -1.21% at 29,096

Shanghai Composite -1.21% at 3,509

 

Economics

Germany – January retail sales fall 4.5% on month prior

Retail sales fell more than expected as a result of lockdown and the withdrawal of a temporary cut in sales tax, Reuters reports.

Sales continued to slide after a decline of 9.1% in December, with most shops and services in Germany closed since mid-February.

Fashion retail sales fell 76.6% YoY, while grocery sales rose 4.3%.

 

UK – House prices rebound 0.7% in February ahead of planned end of stamp duty holiday

Prices rebounded unexpectedly in Feb, compared to a 0.2% contraction in January.

House prices were 6.9% higher YoY in February, acceleration from 6.4% growth in January.

House price growth has accelerated since the government introduce the stamp duty tax exemption on the first £500k of residential property purchases in July.

 

Hungary – Government breaks with EU consensus and begins procuring Chinese and Russian-made vaccines

Hungary has approved the Covid-19 vaccine developed by China’s Sinopharm despite it not being approved for use in the EU, becoming the first EU nation to authorise and procure a shot away from the EU’s centralised scheme, the FT reports.

Hungary has ordered doses of the BioNTech/Pfizer, Moderna and Oxford/AstraZeneca vaccines via the EU , but is the only member to approve the Sinopharm and Sputnik V vaccines.

Prime Minister Orban was vaccinated on Sunday, commenting “If we didn’t have the Russian and Chinese vaccines, we would be in big trouble”

In bypassing the EU-system, Hungary has received 18.3 doses per 100 people, ahead of the next-best supplied EU country, Denmark, which had received 12 doses per 100 people.

The government began deploying the Sinopharm jab on Wednesday and planned to administer 275,000 doses in the first seven days.

 

China – plans to vaccinate 40% of population by end-July according to a senior adviser

New African Swine Fever cases combined with a vaccine issues for the new variant forms of the disease are likely to delay herd recovery.

China may have held the Coronavirus at bay but is struggling to contain new variants of African Swine Fever in its herd which is expected to fall by ~15%.

The harsh winter, flooding along the Yangtze and the intensive farming of pigs in multistorey blocks may be contributory factors though this may be better than having so many pigs in villages where the pigs were sometimes brought into traditional homes in the winter.

GDP 50.6 in February vs 51.3 in January  

Caixin China in February vs 50.9 (51.5 in January,

 

ASEAN nations – 49.7 in February vs 51.4 in January,

Japan 51.4 in February vs 49.8 in January,

India 57.5 in February vs 57.7 in January,

 

 

South Africa 53.0 in February vs 50.9 in January,

Russia 51.5 in February vs 50.9 in January,

Turkey 51.7 in February vs 54.4 in January,

 

EU 57.9 in February vs 54.8 in January,

Germany 60.7 in February vs 57.1 in January,

France 56.1 in February vs 51.6 in January,

UK 55.1 in February vs 54.1 in January.

 

Brazil 58.4 in February vs 56.5 in January.

Mexico 44.2 in February vs 43.0 in January

 

North America – US ISM 60.8 in February vs 58.7 in January

US Markit 58.6 in February vs 59.2 in January

JP Morgan global composite manufacturing 53.9 in February 53.6 in January

Canada 54.8 in February vs 54.4 in January,

 

Currencies US$1.2007/eur vs 1.2067eur yesterday.  Yen 106.87/$ vs 106.60/$.  SAr 15.043/$ vs 15.087/$.  $1.388/gbp vs $1.396/gbp.  0.775/aud vs 0.775/aud.  CNY 6.470/$ vs 6.463/$.

Bitcoin – Citi says Bitcoin is at a ‘tipping point’ and could become the preferred currency for international trade (Reuters)

Bitcoin is reported to have risen to $50,000 overnight

 

Commodity News

Precious metals:  

Gold US$1,717/oz vs US$1,754/oz yesterday

Gold ETFs 103.7moz vs US$104.2moz yesterday

Platinum US$1,178/oz vs US$1,223/oz yesterday

Palladium US$2,354oz vs US$2,358/oz yesterday

Silver US$25.98/oz vs US$26.95/oz yesterday

 

Base metals:  

Copper US$ 9,031/t vs US$9,128/t yesterday – US Forest Service rescinds Rio Tinto’s environmental permit for Arizona copper mine

The US Forest Service announced yesterday that it has rescinded its decision to publish an environmental report that was required for a land swap needed for the company’s Resolution Copper project.

In 2014, President Obama signed a funding bill that allowed Rio to exchange land for another parcel nearby, as long as an environmental permit on the mine was published.

The report was published by the Trump administration in January 2021, clearing the way for the exchange within 60 days.

The decision reverses the one made by Trump officials, and comes less than a week after tom Vilsack was sworn in as secretary of agriculture.

Rio and BHP have already spent more than $1bn on the project already, though they are yet to obtain any permits (Rio Tinto).

 

Aluminium US$ 2,127/t vs US$2,162/t yesterday

Nickel US$ 18,545/t vs US$18,620/t yesterday

Zinc US$ 2,834/t vs US$2,819/t yesterday

Lead US$ 2,080/t vs US$2,082/t yesterday

Tin US$ 23,515/t vs US$24,450/t yesterday

 

Energy:

Oil US$62.9/bbl vs US$65.6/bbl yesterday

Rallying oil prices in recent weeks have intensified speculation that this week the OPEC+ group will decide to put more oil on the market as of April to prevent an over-tightening of the market and preserve market share

As tempting as high oil prices could be from a budget perspective for the biggest oil-exporting nations in the Middle East and Russia, oil at US$70/bbl as many banks now believe prices would reach as early as next quarter, would be a drag on the tentative demand recovery, with large importers such as India suggesting they are not very happy with this year’s rally

Rising oil demand amid expectations of a vaccine-assisted economic rebound in major economies and tightening oil supply, courtesy of the OPEC+ production cuts, have sent oil prices to their highest levels since January 2020, before the COVID-19 pandemic started eroding economies and demand

The market fundamentals plus the Texas Freeze that curtailed US crude oil production and refining operations in the middle of February have also sent the national US average gasoline prices to their highest since August 2019

Meanwhile, government bonds extended a rebound as equity futures rose and the dollar dipped, meaning potentially calmer markets ahead

An Argus report over the weekend confirmed that OPEC+ producers complied at 103% with the oil output cuts in January, higher than the estimated compliance in December

In December 2020, the OPEC+ coalition saw its overall compliance with the original production adjustments at 101%

According to Argus’ sources, in January 2021, the ten OPEC members bound by the pact achieved 108% compliance, while the non-OPEC group of producers, led by Russia, complied with the cuts at 95%, up from 93% in December

Argus itself pegs the January compliance of OPEC+ at 104%, including 110% from the ten OPEC members and a 95% compliance rate for non-OPEC producers.

The biggest producer in the non-OPEC group, Russia, is aiming for 100% compliance, Deputy Prime Minister Alexander Novak confirmed at the beginning of February

Russia was just one of two members of the OPEC+ group, alongside Kazakhstan, which was allowed to raise its oil production – by 65,000bopd each in February and March – while all the others are set to keep output flat and Saudi Arabia is cutting 1MMbopd beyond its quota this month and next

The compliance figures will be reviewed by the OPEC+ panels next week, before the monthly meeting of the group’s ministers, expected to decide how the group will proceed with the supply management from April onwards.

 

Natural Gas US$2.786/mmbtu vs US$2.786mmbtu yesterday

Natural gas futures are edging lower in early trading today after yesterday’s short-covering rally produced a modest gain

Helping to underpin prices was a rebound in the spot market and liquefied natural gas

Gains may have been capped by forecasts calling for lower domestic demand because of the outlook for mild spring temperatures

The focus now shifts to the start of meteorological spring on 1 March and whether end-of-March storage winds up at or above 1.6Tcf

Total inventories will start the new month down to 1.8Tcf, but warmer temperatures are expected to weigh on demand so storage draws could undoubtedly be weak

According to a report from the National Oceanic Atmospheric Administration, the weather points to warmer than normal temperatures in most of the US for the next weeks

Natural gas futures are also continuing to drift as warmer weather in Texas is helping production to recover faster than previously expected from last week’s Arctic freeze that rattled the energy markets last week

Falling spot gas prices are also weighing on the futures markets as well as forecasts calling for improving weather conditions

Nonetheless, traders shouldn’t become complacent with volatility expected to return with the March contract roll-off tomorrow

 

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$167.2/t vs US$169.1/t –

Brazil iron ore exports up 10.9% in February as Vale boots output

Brazil’s iron ore exports rose to 24.05mt last month, as Vale increased its capacity usage while reopening operations previously halted due to the Brumadinho disaster in January 2019.

Vale maintains its production guidance of 315-335mt this year, while reiterating its commitment to reach its full 400mt capacity next year (Fastmarkets MB).

 

Chinese steel rebar 25mm US$718.4/t vs US$720.5/t

Thermal coal (1st year forward cif ARA) US$69.2/t vs US$68.5/t

Coking coal swap Australia FOB US$147.5/t vs US$147.5/t

           

Other: 

Cobalt LME 3m US$52,610/t vs US$51,800/t

NdPr Rare Earth Oxide (China) US$85,778/t vs US$85,880/t – US-Europe REE supply chain emerges from EF-Neo deal

US uranium producer Energy Fuels will begin selling mixed rare earth carbonate from US monazite to Neo Performance Materials, which will separate it into rare earth oxides at its Estonian plant.

Monazite contains all the light and heavy rare earths needed to produce NdFeB magnets, and the deal marks the beginning of the first US-Europe rare earth supply chain in decades.

Under the terms of the non-binding agreement, Neo will purchase and process a minimum of 840tpa of contained total rare earth oxide for sale to its customers (Argus Media).

 

Lithium carbonate 99% (China) US$11,978/t vs US$11,992/t

Spodumene 6% Li2O min, cif (China) US$510/t vs US$455/t

Ferro Vanadium 80% FOB (China) US$34.0/kg vs US$33.5/kg

Ferro-Manganese high carbon 78% Mn US$1,625/t vs US$1,610/t

Tungsten APT European US$260-265/mtu vs US$250-255/mtu

Graphite flake 94% C, -100 mesh, fob China US$560/t vs US$560/t                

Graphite spherical 99.95% C, 15 microns, fob China US$2,625/t vs US$2,625/t

 

 

Battery News

Volvo to go 100% electric by 2030

Volvo intends to phase out all car models with internal combustion engines by 2030 including hybrids as it aims to capitalise on the growing demand for EVs.

Volvo’s Chief Technology Officer commented “There is no-long term future for cars with an internal combustion engine”.

Volvo recently abandoned plans to merge with Chinese car giant Geely, although the two companies said that they would form a partnership instead to make components for electric cars that would be used by both firms.

The automaker also announced that itwill not be investing in cars with hydrogen fuel cells, as it does not think there will be enough demand from customers.

 

Global carbon emissions rebound to pre-lockdown levels 

Global energy-related carbon emissions were higher in December than in the same month in 2019 as polluting activity rebounded from coronavirus lockdowns. 

The pandemic resulted in the largest absolute drop in annual global energy related CO2 emissions in 2020, as economies were in lockdown. But recovery in the second half of 2020 and “a lack of clean energy polices” caused emission to rise a further 2% year on year in December.  

The findings follow a warning from the UN that the latest emissions-reduction plans see out by 75 signatories to the Paris agreement fell ‘far short’ of what was needed to avoid the worst effects of a warming planet.  

 

Company News

Alba Mineral Resources (LON:ALBA) 0.32p, Mkt cap £20.2m – Results from Clogau St David’s mine

Alba Minerals has announced that its most recent drilling at the Clogau St David’s mine in north Wales has extended the known strike length of the recently identified new veins to 58m.

Assays are not yet available from the hole, LL009, but the company says that it encountered “an increased sulphide abundance in the lode intercepts at 85.8 m (~1 m thick), 104.65 m (0.15 m thick) and 106.8 m (~0.6 m thick) (see Figure 3 in the PDF version of this RNS).  Sample assays of these vein intercepts will help determine if this mineralogical change has implications for gold mineralisation.”

The company continues saying that “While the target structure is relatively thin, overall, in LL009, the structure remains unconstrained to the west of this intercept, presenting targets for future drilling phases.  Preliminary logging suggests that LL009 encounters the target structure at ~106.8 m, some 58.6 m away from the vein intercept in LL006 which represents the likely eastern margin of the pay-shoot.  For the first time, then, the Company is able to project the strike length of the projected Llechfraith Lode as being 58 metres wide by 66 metres deep”.

The final drill-hole of the current programme, hole LL010, plans to test the depth extension of the vein system at a depth of around 100m below the existing mine workings.

Discussions are underway with contractors “to assess the opening up of the Llechfraith Lode, both to allow for preliminary bulk sampling and testwork via the Company’s existing pilot processing plant but also to allow for possible commercial-scale mining in the future. Opening up the lode will also provide fresh exposure for the Company’s technical team to further assess the geology of the pay shoot.”

Conclusion: We endorse the view of the company’s Chief Operating Officer that “While we should await the results of the drill core assays before reaching any preliminary conclusions, the significant dimensions of the Llechfraith Lode, as defined by the drilling so far completed, indicate that this could well be a significant contributor to future production at Clogau-St David’s.” although we wonder if speculation on future production may be slightly premature at this stage.

 

Altus Strategies* (LON:ALS) 84p, Mkt Cap £59m – Drilling at Tabakorole returns good close to surface gold intersections

Further drilling results from the 6,300m RC programme (39 holes) show wide high grade close to surface intersections at the Tabakorole gold project in southern Mali.

Selected intersections from three further holes included:

1.82g/t over 3m from 38m (20TBKRC004)

2.13g/t over 12m from 18m and 1.94g/t over 18m from 53m (20TBKRC005)

2.00g/t over 3m from 10m and 1.84g/t over 22m from 77m (20TBKRC006)

The results provide a significant improvement in both thickness and grade on previously modelled part of the orebody.

The programme has been funded and completed by Marvel Gold, a JV partner, with a goal to both expand the MRE testing along strike extensions (NW and SE) as well as infill drill areas of plunging high grade shoots within the resource.

Results from a further 28 RC drill holes (3,903m) are expected to be released shortly.

Conclusion: A good set of exploration results from the latest Tabakorole RC drilling programme point to an improvement on previously modelled grades and widths. Further drilling assays testing on strike and down dip extensions to be released shortly.

*SP Angel acts as nomad and broker to Altus Strategies

 

Castillo Copper (LON:CCZ) 2.85p, Mkt Cap £29.0m – Strategy to recommence mining at the Big One deposit

Castillo Copper has outlined its strategic approach to the re-starting of mining at the Big One copper deposit in Queensland in order to exploit the opportunity presented by the current robust copper price and a growing recognition of potential bottlenecks in the copper supply chain.

The statement follows recent drilling success and reviews of historical results which has “produced exceptional high-grade intercepts” including some assay grades in excess of 10% copper with individual intersection widths ranging from single metres up to over 40 metres.

The company says that its geological consultant is expected to “complete modelling of the inaugural JORC compliant resource for Big One Deposit” shortly and that it is firming up its plans to make a mining licence application.

The deposit was previously mined during the late 1990s “producing 4,400t … [of] … supergene ore averaging 3.5% copper – via several open pits”.

The company suggests that it does not consider that it has yet established the full scale of the mineralisation with plans to undertake additional induced polarisation geophysical work “to identify incremental test drill targets”.

Managing Director, Simon Paull, commented that “We are highly optimistic that the next phase of planned exploratory work has the potential to further extend known mineralisation and build out this high-grade shallow copper system. Consequently, the Board believes it is prudent to start preparing the ground-work to potentially recommence mining operations”.

Conclusion: Plans to restart mining at the Big One deposit seek to harness the current buoyant copper market and perceptions of constraints within the supply chain.  The forthcoming inaugural JORC mineral resource estimate will be an important element of any future mining licence application and we look forward to its release.

 

Mkango Resources* (LON:MKA) 25.25p, Mkt cap £31.9m – Flotation pilot plant test-work completed

(Mkango’s 75.5% subsidiary, Maginto Ltd holds a 25% stake in HyProMag which is a partner in the ‘Rare–Earth Recycling for E-Machines’ RaRE project)

Mkango Resources has announced the successful completion of its pilot plant scale flotation testing of material from its Songwe Hill rare-earths project in Malawi.

Results from the test work, which was undertaken at the ALS Metallurgy laboratory in Perth “will be announced in due course, and the flotation concentrate produced will be supplied to ANSTO Australia for hydrometallurgical piloting”.

The company confirms that it is continuing discussions on the location for a rare-earths separation plant to process “the high grade, purified mixed rare earth carbonate produced at Songwe, enriched in high value neodymium, praseodymium, dysprosium and terbium”.

CEO, William Dawes, confirmed that “The smooth commissioning of the flotation pilot plant is a strong credit to the ALS Metallurgy team, as well as Mkango’s technical consultants and advisors. The flotation pilot plant provides Mkango’s lead engineers, SENET (a DRA Global Group Company), with essential operating data for the Feasibility Study and to assist in engineering the Company’s commercial scale operation”.

The detailed metallurgical test work should form a key element of the feasibility study for the development of Songwe Hill. The company recently confirmed that it aims to complete the feasibility study during the fourth quarter of 2021.  The study is being funded by a £12m investment by Talaxis which will have the right to increase its interest in the project by a further 26%, to 75%, by arranging project development finance.

Conclusion: The successful pilot plant scale testing of the planned flotation of material from Songwe Hill is a significant step in demonstrating the suitability of the flowsheet and in gathering the detailed operational data for flowsheet design. We look forward to the results of the testing and to the completion of the feasibility study later this year.

*SP Angel act as Nomad and Broker to Mkango Resources

 

Serabi Gold* (LON:SRB) – 73.5p, Mkt Cap £45.4m – US$17.5m fund-raising

Serabi Gold has issued a further 16.65m shares at a price of £0.75 in order to raise approximately US$17.5m (£12.5m)

We estimate that the new shares represent approximately 22% of the enlarged capital of Serabi Gold.

Serabi Gold’s principal shareholder, Greenstone, which owns 25.2% of the company, has agreed to “redeem the outstanding Convertible Loan Notes held by Greenstone being US$2 million together with accrued interest of approximately US$200,000 and the arrangement fee and other expenses of approximately US$333,000, to terminate the Subscription Deed and to release the security granted by the Company in favour of Greenstone”.

Chief Executive, Mike Hodgson explained that the fund-raising leaves Serabi debt-free and in a strong financial position to “advance our significant growth opportunities”.

Mr. Hodgson confirmed that the company has made good progress on the prepartion of the remaining licence applications for the Coringa project “with a trial mining licence in place to allow mine development, we will commence development of the underground mine this year. This will improve the project, hopefully allow better optimisation of mine planning, and put us in a good position to seek attractive debt financing terms”

He also said that the additional finance would enable the company to “advance some of the best of numerous exploration opportunities that exist in close proximity to both Palito and Sao Chico orebodies and I feel confident that over the next couple of years these exploration prospects will generate some significant resource growth for the Company”.

Mr. Hodgson has previously indicated that 2021 would see the company’s most substantial exploration effort so far and the additional finance should facilitate that escalation of the effort.

Conclusion: Serabi Gold is now debt free and generating cash from its existing operations at Palito and Sao Chico.  The additional funds put the company in a position to progress the Coringa development and to advance its exploration ambitions.

*An SP Angel analyst has visited the Serabi’s gold mining operations in Brazil

 

Shanta Gold (LON:SHG) 14p, Mkt Cap £147m – Strong FY20 results highlight significant deleveraging with the Board announcing final dividend

Revenue amounted to $147.4m on sales of 83.2koz (2019: $112.8m and 80.9koz) reflecting strong growth in spot gold prices.

A loss on forward gold contracts amounted to $11.7m during the period with the Company unwinding all its forward sale commitments in late December and currently being hedge free.

Average realised gold price was $1,495/oz (2019: $1,377/oz) vs average market price of $1,772/oz.

Cash costs and AISC (excl capitalised underground development) were $579/oz and $841/oz (2019: $544/oz and $777/oz).

Operating profit came in at $43.8m (2019: $5.1m).

EBITDA totalled $63.9m (2019: $47.7m).

PBT and PAT were $39.0m and $17.2m, respectively (2019: -$1.2m and -$9.5m).

Net CFO amounted to $34.6m (2019: $37.6m) with changes in working capital accounting for a -$22.1m (2019: -$7.9m).

Capex was $13.6m (2019: $17.2m).

Net cash position stood at $37.3m as of YE20 vs net debt of $14.3m in the previous year.

VAT receivable climbed to $27.6m by YE20 with $1.9m having been offset against corporate taxes falling due in the year.

2021 guidance is for 80koz at AISC of $900-950/oz on a like-for-like bases and $1,050-1,100/oz including underground development costs.

Production is expected to increase throughout the year on the back of a ramp up in the third mill and forecast increase in grades with a 45%/55% split between H1/H2.

$8.0m exploration budget for Tanzanian operations will largely be directed towards LOM extension drilling at NLGM.

In the view of significantly deleveraging the balance sheet and going net cash positive in 2020, the Board proposed a 0.10p final dividend in respect of 2020.

The Company is planning to pay a semi-annual dividend moving forwards with the size to be contingent on the operating and financing outlook.

Conclusion: Strong financial results reflect robust operations at the NLGM and favourable gold price environment with the Company going net cash positive for the first time in its producing history and announcing a 0.1p dividend.

 

 

Analysts

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

 

Sales

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                                                            

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, Antimony

Asian Metal

Tungsten

Metal Bulletin

 

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Dow Jones Industrials

+0.09%

at

31,522

Nikkei 225

Closed

at

30,156

HK Hang Seng

+1.03%

at

30,633

Shanghai Composite

-0.17%

at

3,636

 

Economics

 

Currencies US$1.2160/eur vs 1.2107eur yesterday.  Yen 105.18/$ vs 105.78/$.  SAr 14.672/$ vs 14.860/$.  $1.408/gbp vs $1.400/gbp.  0.791/aud vs 0.786/aud.  CNY 6.461/$ vs 6.469/$.

 

Commodity News

Precious metals:  

Gold US$1,809/oz vs US$1,792/oz yesterday

   Gold ETFs 105.1moz vs US$105.5moz yesterday

Platinum US$1,260/oz vs US$1,266/oz yesterday

Palladium US$2,401/oz vs US$2,391/oz yesterday

Silver US$28.06/oz vs US$27.34/oz yesterday

Base metals:  

Copper US$ 9,186/t vs US$9,037/t yesterday

Aluminium US$ 2,168/t vs US$2,146/t yesterday

Nickel US$ 19,460/t vs US$19,700/t yesterday

Zinc US$ 2,898/t vs US$2,904/t yesterday

Lead US$ 2,158/t vs US$2,160/t yesterday

Tin US$ 26,595/t vs US$26,570/t yesterday

Energy:

Oil US$66.1/bbl vs US$63.4/bbl yesterday

Natural Gas US$2.916/mmbtu vs US$2.977/mmbtu yesterday

 

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$171.5/t vs US$168.2/t

Chinese steel rebar 25mm US$719.6/t vs US$714.4/t

Thermal coal (1st year forward cif ARA) US$67.0/t vs US$65.8/t

Coking coal swap Australia FOB US$154.5/t vs US$154.5/t

           

Other: 

Cobalt LME 3m US$50,000/t vs US$50,000/t

NdPr Rare Earth Oxide (China) US$73,288/t vs US$73,200/t

Lithium carbonate 99% (China) US$11,144/t vs US$10,822/t

Spodumene 6% Li2O min, cif (China) US$455/t vs US$395/t

Ferro Vanadium 80% FOB (China) US$31.5/kg vs US$30.5/kg

Ferro-Manganese high carbon 78% Mn US$1,610/t vs US$1,610/t

Tungsten APT European US$250-255/mtu vs US$250-255/mtu

Graphite flake 94% C, -100 mesh, fob China US$560/t vs US$560/t                

Graphite spherical 99.95% C, 15 microns, fob China US$2,625/t vs US$2,625/t

 

 

Battery News

Company News

 

Analysts

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

 

Sales

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                                                            

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, Antimony

Asian Metal

Tungsten

Metal Bulletin

 

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.

Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SPA is registered in England and Wales with company number OC317049.  The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.