Today's Market View - Copper prices fall on trade war despite tight supply


SP Angel – Morning View – Thursday 23 05 19

Copper prices fall on trade war despite tight supply


MiFID II exempt information – see disclaimer below  

Atalaya Mining (LON:ATYM) – Q1 2019 - Profit increases 61%

Aura Energy (LON:AURA) – Tiris uranium project DFS achieves first yellowcake production

Bushveld Minerals* (LON:BMN) – Results highlight rapid growth of business with Vametco with further upside to come from Vanchem

Georgian Mining Corporation (LON:GEO) – Placing and Subscription to Raise £380,000

Ormonde Mining* (LON:ORM) – Moving from commissioning phase to ramp-up at Barruecopardo

Phoenix Global Mining* (LON:PGM) – Raising £700,000 to advance Empire mine SXEW Bankable Feasibility Study

Talga Resources* (ASX:TLG) – PFS results support robust active anode production


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US$1.1138/eur vs 1.1153/eur yesterday  Yen 110.21/$ vs 110.40/$  SAr 14.440/$ vs 14.375/$  $1.261/gbp vs $1.266/gbp  0.687/aud vs 0.688/aud  CNY 6.915/$ vs 6.912/$


Commodity News

Precious metals:         

Gold US$1,276/oz vs US$1,273/oz yesterday

   Gold ETFs 70.6moz vs US$70.6moz yesterday

Platinum US$801/oz vs US$812/oz yesterday

Palladium US$1,314/oz vs US$1,314/oz yesterday

Silver US$14.47/oz vs US$14.41/oz yesterday


Base metals:   

Copper US$ 5,910/t vs US$5,974/t yesterday

  • Copper continues slumping towards a three-year low, with all investor eyes on the trade war, even after Zambia moved closer to nationalising some of its mines.
  • Zambian President Edgar Lungu is escalating a spat with miners including Vedanta Resources Ltd. and Glencore PLC over the share of royalties the country collects from the extraction of its vast reserves of copper. On Monday, the government filed notification of plans to take over Vedanta’s domestic copper assets.
  • Nationalisation increases the risks of possible supply disruptions in a tight global market.

Aluminium US$ 1,775/t vs US$1,794/t yesterday

Nickel US$ 11,910/t vs US$12,010/t yesterday

Zinc US$ 2,519/t vs US$2,562/t yesterday

Lead US$ 1,802/t vs US$1,809/t yesterday

Tin US$ 19,290/t vs US$19,330/t yesterday



Oil US$70.5/bbl vs US$71.7/bbl yesterday

Natural Gas US$2.551/mmbtu vs US$2.617/mmbtu yesterday

Uranium US$24.60/lb vs US$24.60/lb yesterday



Iron ore 62% Fe spot (cfr Tianjin) US$101.4/t vs US$98.6/t

Chinese steel rebar 25mm US$623.6/t vs US$621.4/t

Thermal coal (1st year forward cif ARA) US$68.1/t vs US$69.0/t

Coking coal futures Dalian Exchange US$196.0/t vs US$196.1/t



Cobalt LME 3m US$34,250/t vs US$34,500/t

  • Glencore will supply cobalt feedstock to restart First Cobalt Corp’s refinery in Canada, which is expected to result in an annual production of around 2,000-2,500tpa cobalt in sulphate.
  • The refinery in Ontario has the potential to produce either a cobalt sulfate for the lithium-ion battery market or cobalt metal for the North American industrial and military applications.
  • Once operational, the refinery would become the only North American producer of refined cobalt for electric vehicle market.
  • The refinery could be operational in 18-24 months, with Glencore evaluating providing a loan to fund the capital, and discussions are under way with provincial government officials to streamline and accelerate the permit amendment process.

NdPr Rare Earth Oxide (China) US$44,108/t vs US$40,219/t

Lithium carbonate 99% (China) US$9,617/t vs US$9,621/t

Ferro Vanadium 80% FOB (China) US$40.0/kg vs US$41.0/kg

Antimony Trioxide 99.5% EU (China) US$5.8/kg vs US$5.9/kg

Tungsten APT European US$270-280/mtu vs US$270-280/mtu


Battery News

California pushes back for EVs: proposed bill for no gas cars sold in US by 2040

  • As the Environmental Protection Agency prepares to introduce the final form of its proposal to freeze US fuel economy standards sometime in the near future, California is giving more indications of how it intends to fight the regulatory rollback.
  • Last week the Zero-Emission Vehicles Act of 2019 was introduced by Californian Rep Mike Levin and Senator Jeff Merkley. The proposed bill would require 50% of new passenger vehicle sales in the US to be zero emission EVs, by 2030.
  • That percentage would increase 5% each year until 2040, when all new passenger cars sold in the US would be all-electric (or hydrogen fuel cell) vehicles.
  • As the San Diego Union-Tribune reported, “Levin admitted the bill is a long shot.”
  • Levin said the bill is based around existing California policies, including the California Air Resources Board’s (CARB) Advanced Clean Cars program adopted in 2012.
  • CARB chairman Mary Nichols threatened even tougher pollution rules late last week in direct response to the anticipated weakening of national fuel economy standards.
  • Nichols said California would be forced to pursue ‘extreme’ requirements to offset the related increase in pollution, as reported by Bloomberg.
  • Drafted remarks, which Bloomberg notes were not delivered “exactly as prepared” included a reference to “an outright ban on internal combustion engines.”
  • Trump’s EPA reportedly finalized “key details” of the fuel economy standards freeze in April, and automakers expressed concerns over a “split market” due to some states enforcing more stringent standards than others.


Electric plane service offers on demand service 3x faster and 4x cheaper than driving

  • On-demand flight service, BlackBird, is partnering with Bye Aerospace to add 100 more electric airplanes to its platform, creating substantial demand for next generation materials and battery technology.
  • The 100 commercial eFlyer 4 plans are billed as “the world’s first practical four-seat, electric-powered plane”.
  • Bye Aerospace says of the eFlyer 4 “the energy cost for the electric eFlyer 4 is four times less expensive than driving a conventional car per mile, three times faster, and requires no aviation fuel, resulting in zero emissions and significantly lower noise pollution compared to conventional aircraft.”


Perovskite-based solar cells on sale by 2020

  • A UK company plans on bringing perovskite-based solar cells to market by the end of 2020.
  • Oxford PV, long a leader in perovskite solar development, may bring a silicon-perovskite solar cell to market by the end of next year, according to MIT Technology Review.
  • The article says: Oxford PV plans to deliver solar cells based on perovskite and silicon to the market by the end of next year, using a German factory it acquired in 2016 from Bosch Solar. The two materials will come in a package that otherwise looks, ships, and installs the same way as a standard solar panel, in a kind of half step that the company believes will make it easier to introduce the technology to the market.
  • While perovskite-based cells have advantages, they can be cheaper, more efficient, and easier to produce, there are still long-term durability questions.
  • But Oxford PV CEO Frank Averdung said the company has “solved” the reliability issue: “We have nailed it, and this is the reason we can move into manufacturing mode now.”


Tesla Microgrid

  • Blue Lake Rancheria casino in California has developed its own solar-powered microgrid on Tesla batteries, allowing it to disconnect from the main grid.
  • The setup powers six buildings, including a 55,000-square-foot casino and 102 hotel rooms—over 140,000 square feet of total building space.
  • The Rancheria keeps adding solar panels and Tesla batteries, but it’s still in constant communication with the main grid: On a typical day the Rancheria still draws a small amount of power from PG&E’s grid to stabilize the system. But if they lose that connection for whatever reason, those six core buildings could theoretically last for months on solar power, with backup generators kicking in at night or during periods of cloudiness.
  • This is especially useful in California. After recent wildfires that can cause some remote locations to become disconnected from the grid for long periods of time, many in the state have been looking to microgrids as a possible solution.


Company News

Atalaya Mining (LON:ATYM) 204.5 pence, Mkt Cap £280.9m – Q1 2019 - Profit increases 61%

  • Atalaya Mining reports a 61% increase in Q1 profit of €14.2m (Q1 2018 - €8.8m), despite a modest decline in operational revenue of 1.8% to €51.7m (Q1 2018 - €52.7m) resulting in part from a 7.6% lower received  copper price of US$2.80/lb (Q1 2018 – 3.03/lb) partially offset by higher production of 10,219t of copper in concentrates (Q1 2018 -9,441t).
  • The company is maintaining its full year production guidance target of 45-46,500t of copper production.
  • The company achieved a 17.6% reduction in operating costs to €30.0m (Q1 2018 - €36.4m) giving cash operating costs of 1.89/lb (Q1 2018 – US$2.27/lb) and all-in sustaining costs of US$2.18/lb (Q1 2018 – US$2.65/lb). “Management expects cash costs for the year to remain within the guidance range provided of $1.95/lb to $2.15/lb and AISC from $2.25/lb to $2.45/lb.”
  • Excluding changes in working capital, operating cash flow for the quarter was €20.3m (Q1 2018 - €15.2m), however, working capital requirements increased by approximately €12.2m during the quarter, largely as a result of an €11.9m increase in trade and other receivables.
  • Investment of €17m in the continuing expansion of Proyecto Riotinto to the 15mtpa rate during the quarter resulted in a cash outflow of around €9m before financing during the quarter, leaving Atalaya with a cash balance of €24m at 31st March 2019.
  • The expansion project is now 97% complete “with construction reporting 72% completion.” The flotation and concentrate handling areas are reported to be in the final stages of commissioning while “The new primary crushing area is mechanically well advanced with electrical works progressing. In the new milling area, mechanical activities are progressing according to plan.”
  • Commenting on the performance, Atalaya Mining’s CEO, Alberto Lavandeira, said that “We are delighted with Atalaya's financial performance for Q1 2019, in which reduced operating costs have led to a substantial increase in profits of over 60%.”
  • He went on to confirm that “Progress with our expansion to 15Mtpa at Proyecto Riotinto is proceeding to plan with mechanical completion on track for the end of Q2 2019.  Once completed, we will enjoy improved operational efficiencies and reduced cash costs compared with 2018.”

Conclusion: Proyecto Riotinto has achieved substantial cost savings, which more than offset the impact of lower copper prices and delivered a 61% increase in quarterly profit compared to Q1 2018. In our view this is an important indication of management’s control of the operation at a time when the expansion project could have diverted its attention.


Aura Energy (LON:AURA) 0.7p, Mkt Cap £8.8m – Tiris uranium project DFS achieves first yellowcake production

  • Aura Energy report first production of ‘saleable’ yellowcake as part of the ongoing Definitive Feasibility Study, with impurity levels in the product within the acceptable constraints relative to the ASTM standards.
  • The UO4 yellowcake was produced during the Aura test work phase being conducted in the Australian Nuclear Science & Technology Organisation (ANSTO Minerals) laboratories.
  • The precipitation test work will continue with further optimisation of the product planned in the next stage of work at ANSTO Minerals.
  • Executive Chairman, Peter Reeve, adds “production is a true milestone for Aura Energy’s push to achieve producer status…and will assist in marketing studies and progression of our financing discussions”.


Bushveld Minerals* (LON:BMN) 27p, Mkt Cap £302m – Results highlight rapid growth of business with Vametco with further upside to come from Vanchem

BUY – Target price to be adjusted following further review of income and expenses


  • Bushveld Minerals report full year results for 2018.
  • Sales from Vametco appear higher than our estimate at US$192m vs our $178m forecast due to our inclusion of a sales discount in our sales estimate.
  • Sales and distribution costs are split out in the accounts at US$10.7m accounting for much of the difference
  • There is also some impact form due to the timing of vanadium sales in relation to some big moves in vanadium prices in the year.
  • The price discount we normally apply to vanadium sales appears to have narrowed in last year’s unusual pricing environment where consumers were competing for available stock and we assume the narrowing of the discount should continue as the market is forecast to remain in a supply / demand deficit.
  • Cost of sales were slightly lower than expected at US$65m vs our US$70.5m estimate. Again, last year was unusual in terms of Bushveld’s consolidation of its ownership combined with several unofficial stoppages relating to promises made by previous management on a dispute which we believe has now been resolved.
  • Other Operating Income: The company also made US$7m of other operating income which looks good.
  • Other mine operating costs and Idle plant costs came to US$5.2m. We would not expect to see significant costs in these areas going forward.
  • Administration expenses of US$23m include US$8.3m worth of shares issued, US$7m of staff costs, US$1.9m of professional fees and US$5.5m of Other Expenses.
  • Payments to senior employees, staff and directors were seen as long overdue due given the relatively low salaries previously paid and need to retain the team at Vametco.
  • The team is now working well, focussing on reducing costs while improving production through the better running of the Vametco plant.
  • Their expertise should also be of great benefit to the Vamchem plant when it is consolidated into the group and as Vanchem restores production at its idled furnaces.
  • Group Operating Profit came in at US$95m vs our US$107m due to these additional Admin expenses.
  • Finance Income at US$2m was balanced by Finance costs of US$1.2m.
  • Share based payments for Economic Empowerment transactioncost US$3.2m .
    • Movement in earnout estimate cost a further US$6m and was part of the ongoing cost of acquiring the Vametco mine and plant.
    • Pre-Tax profit of US$86m was therefore adjusted lower than our US$106m forecast due to the accounting treatment effectively bringing the earnout expense forward .
    • Taxation of US$37m was higher than our US$30m estimate due to the additional ‘Other operating income’ of US$7m and higher revenue recorded pre selling and distribution costs.
    • Post-tax profit came in at US$87m vs our US$76m estimate due principally to the adjustments described above.
    • Earnings per share came in at 2.9USc vs -0.2USc a year earlier.

Conclusion: Bushveld results record a busy and volatile year through 2018. The figures reflect the innovation of the group, the huge transition made and some understandable expenses in this transition. The results indicate good potential to build on last year and to continue to grow the business with the Vanchem acquisition.

*SP Angel acts as Nomad & broker to Bushveld Minerals. 


Georgian Mining Corporation (LON:GEO) 2.05p, Mkt Cap £2.4m – Placing and Subscription to Raise £380,000

  • Georgian Mining report the placing and Placing and Subscription to Raise £380,000.
  • Funds will be used to sustain the company’s operations in Georgia and to look for new assets where the company can develop further value.
  • Four of the directors have agreed to completely write off their compensation for the last 12 months, which is about fair given the level of success in the business last year.
  • The Georgian government has so far failed to renew Georgian’s key exploration permits preventing the company from continuing drilling and significant exploration at its Kvemo Bolnisi copper, gold project.

Conclusion: Mike Struthers, Georgian’s CEO, has been working hard behind the scenes to get the government to renew its exploration permits.

We understand the renewal is now with the Prime Minister but we do not understand why a normal exploration permit extension should take so long to execute.

*SP Angel acts as Nomad and Broker to Georgian Mining. 


Ormonde Mining* (LON:ORM) 4.15p, Mkt Cap £19.6m – Moving from commissioning phase to ramp-up at Barruecopardo

  • Ormonde Mining has reported that plant commissioning at its 30% owned Barruecopardo tungsten project in Spain is now largely complete and that planned throughput levels are being achieved as the project moves into a ramping-up phase to the targeted 1.1mtpa throughput.
  • Ormonde’s operating company, Saloro, has taken over plant operations from the constructors, Fairport Engineering, and the plant is producing a tungsten trioxide concentrate with grades in excess of 74% compared to typical industry norms of 65%.
  • The company is working to refine the concentrate production to meet delivery specifications “in the near term”. Delivery specifications would normally include maximum limits for penalty elements such as arsenic and, at this stage of the project, managing these detailed points, while important to both the producer and the off-taker, would be regarded as a normal part of the transition from the construction and commissioning phases into operational mode and would not, in our view, be a cause for concern at this point.
  • The company explains that it is currently sourcing the initial ore feed from the relatively low grade, northern starter pit , which “has returned lower grade than forecast due to localised complexity within this peripheral remnant zone”.
  • Operational plans are underway to bring forward “mining in the higher grade southern starter pit, where mining has recently commenced … [and] … recent drilling has shown higher grades” and to accelerate “the waste stripping of the east wall of the historic pit, from surface to around 80 metres depth ("the east wall cutback"), to bring forward access to the main orebody situated below the historic open pit.”
  • The main orebody, which will be accessed following the mining of the starter pits and completion of the de-watering of the historic open pit, “is a broad and more continuous high-grade zone situated below the historic open pit”.
  • Commenting on the progress achieved, Ormonde Mining’s Chairman, Michael Donoghue, confirmed that the process plant commissioning was largely complete and that throughput rates were “sufficient to meet the Project’s steady state processing target of 1.1 million tonnes per annum”.
  • Mr. Donoghue also confirmed that the “concentrates produced during commissioning are close to targeted specification, so with feed grade being the critical issue the focus on the Project has now turned to developing mining procedures and revised mining schedules to target higher grade, more representative ore sources earlier in the Year-1 ramp-up schedule. This includes accelerating waste stripping to allow access to the main orebody to be brought forward."

Conclusion: Ormonde Mining is now moving from the construction and commissioning phases of the Barruecopardo tungsten project into the operational phase. Throughput rates are reported to be on track to achieve the planned 1.1mtpa, tungsten trioxides grades in the concentrate exceed normal industry levels and the company is working on the operational processing refinements to ensure concentrates meet delivery specifications. Plans to advance waste stripping to access higher grade ore feed are underway. We look forward to seeing operational statistics from Barruecopardo as the ramp-up continues.

*SP Angel acts as Broker to Ormonde Mining


Phoenix Global Mining* (LON:PGM) 16.5p, Mkt Cap £6.4m – Raising £700,000 to advance Empire mine SXEW Bankable Feasibility Study

  • Phoenix Global Mining has announced that it has raised £700,000 though the issue of a further 4.1m shares at a price of 17p/share. The new shares are priced  at a 13.3% premium to the closing mid-price on 22nd May and, we estimate, represent approximately 9.6% of the enlarged capital of the company.
  • The new shares carry a warrant, valid until 31st January 2022,  entitling the holder to subscribe for a further share priced at 28p per share for every four of the shares currently being issued.
  • The additional funds are to used to “accelerate the Bankable Feasibility Study (“BFS”) on an open pit heap leach solvent extraction electrowinning (“SX-EW”) project, to produce copper and zinc” from the recently upgraded oxide mineral resource at the historic Empire mine in Custer County, Idaho.
  • Phoenix Global Mining “expects the BFS to be completed in mid-2020, and production to commence in 2021.” Important items to be addressed by the BFS include, “detailed mine planning and scheduling, additional metallurgical test-work, heap leach pads, ponds and process plant design, infrastructure design, environmental impact statement and project economic analysis.”
  • Commenting on the project in the light of the recent mineral resource upgrade and the financing, Chief Executive, Dennis Thomas, explained that “Given the advanced status of the project, our focus will now turn to project finance. We will seek to finance the project with a mix of debt and other instruments including offtake finance and we are progressing a number of these discussion in tandem with the BFS studies.” 
  • Mr. Thomas went on to explain that “we are ultimately looking to minimise the issue of equity which has been required to develop the project to this stage. Management are significant shareholders in the Company and we hope to keep further equity dilution to a minimum.” In order to achieve this the company is examining “a mix of debt and other instruments including offtake finance” to finance project development.

Conclusion: Raising additional funds to expedite the BFS for the Empire mine oxide project at a premium to the recent market price should help the company to deliver the BFS by mid-2020 as Phoenix Global Mining works towards initial production in 2021.

*SP Angel acts as Nomad and broker to Phoenix Global Mining


Talga Resources* (ASX:TLG) A$0.6, Mkt Cap A$131.3m – PFS results support robust active anode production

  • Vertically integrated technology company report strong technically and financially robust economic returns for the development of Talga’s wholly-owned Vittangi Graphite project, delivering pre-tax project NPV8 of US$1,056m with pre-tax IRR 55%.
  • Vittangi achieves margins due to a combination of vertical integration and a high-performance, fully engineered and coated lithium-ion graphite battery anode product, Talnode®-C, for the global battery supply chain.
  • Project development is focused on a staged conventional open-pit mining operations with on-site concentrator followed by subsequent coastal anode refinery, utilising the economic Ore Reserve of 1.9Mt @ 23.5% Cg (18% resource) from the current global Indicated Mineral Resource estimate of 10.7Mt @ 25.7% Cg.
  • The graphite at the Nunasvaara Resource consists of homogeneous, evenly distributed, very fine micro-crystalline flake, forming the world’s highest grade JORC graphite resource.
  • A phased development plan incorporates lower initial capital expenditure of US$27m for Stage 1, commencing in 2020 to capture near term market opportunities. Initial sales focus on approx. 5ktpa Talnode-C over two years, based on the trail mining of approx. 25ktpa ore processed via toll-processing and early stage refining.
  • Stage 2, dependent on obtaining the exploitation concession, intends to expand to full-scale production of approx. 19ktpa Talnode-C, with commissioning proposed for 2023.
  • Ongoing Talga ore processing test-work has focused on adding value to <10 micron="" microcrystalline="" flake="" graphite="" to="">99.5%C purity anode products.
  • Test-work on spheronisation of the high purity graphite flakes indicates shaping into spherical-aggregates achieves narrow size distribution. Surface coating technology has also been developed to produce a fully engineered coated li-ion battery anode material.
  • Talnode-C pricing in the PFS is based on a Talga commissioned report by Benchmark Mineral Intelligence is US$11,250/t, which accounts for premium, high performance specification and applying a 20-30% discount to account for long-term offtake pricing.
  • Annual estimated revenue targets US$210m from Stage 2 steady-state production of 19,000tpa Talnode-C via integrated concentrator and refinery in north Sweden.
  • The operation benefits from existing mining and processing infrastructure of northern Sweden, with established modern roads, ample water supply, nearby container ports and low-cost, low-CO2 hydropower.
  • With the assistance of corporate adviser, Sternship Advisers, funding for the project is at advanced stage discussions with third parties.
  • Moving forward, Talga will look to optimise and reduce the estimated capital and operating costs, including evaluating the option using thermal purification, further validation of Talnode-C with potential customers and building the relevant qualified management to draw the project into development.

Conclusion: The reported PFS highlights outstanding technical and financial qualities of the Vittangi graphite project in Sweden. Vertical integration allows stringent quality control, cost management and captures significant value from the premium active anode material. Placement in Europe will allow Talga to capitalise on the fastest growing global battery market.


*SP Angel acts as UK broker to Talga Resources. SP Angel analysts have visited the leading battery R&D institution WMG partnering with Talga.  

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