SP Angel . Morning View . Wednesday 04 11 20
US dollar gains as Trump threatens challenge in Supreme Court
SolGold* (LON:SOLG) – Initial assay results from Porvenir drilling
Talga Resources* (ASX:TLG) – UK funding and LKAB / Mitsui intent to help develop Swedish battery anode project
US – Trump announces he will go to the Supreme Court to stop further vote counting
President Trump is fighting to the very end claiming electoral fraud and threatening to appeal to the Supreme Court.
So far the votes are 49.4% to Biden and 48.6% to Trump with 238 electoral votes to Biden and 213 to Trump.
But whoever wins the Presidency will have to deal with a divided Congress though US politicians tend to pull together to get things done.
The US results indicate Trump would have won easily if it had not been for COVID-19 and his handling of the pandemic damaging his popularity.
The voting suggests that Americans would normally prefer a businessman running the country over a politician.
10y bond yields dropped as much as 12bp at some point, on track for the largest daily drop since April, as markets started to unwind expectations for the decisive Democrats win.
Investors are reported to have been building record short positions in bond futures amid expectations for strong stimulus and polls showing a likely win for Biden and possible majority for Democrats in both houses of Congress.
Republicans are also defending their 53-47 majority in the Senate today with 35 (23 Republican-held) of 100 seats being contested.
Preliminary results suggest Republicans may have held on to their majority.
New factory goods orders climbed strongly in September beating market estimates, although further gains could be limited amid a slowdown in consumer spending and no new fiscal stimulus support.
Factory Orders (%mom): 1.1 v 0.7 in August and 1.0 est.
US dollar jumps to five-week high as election race tightens
The US dollar strengthened as riskier currencies fell on Wednesday, as early results in the US presidential election showed a tighter race than many anticipated.
The greenback was up around 1% against a basket of currencies, as the euro fell 0.7%, while the Mexican Peso and Renminbi weakened 3% and 0.7% respectively (Reuters).
The US dollar index hit its highest level since the 28th of September at 94.20 during early Wednesday (FX Street).
Base metal prices fall on dollar strength and election uncertainty
Aluminium, nickel, copper, and zinc prices had all fallen over 1% as of 8:20am this morning, as the dollar hit a five-week high and Trump makes unproven allegations of vote rigging.
Trump addressed his supporters, saying he would ask America's Supreme Court to intervene on vote counting, further adding to the uncertainty which has weighed on metals markets.
A tighter-than-expected race between the two candidates has meant many investors have wound back bets for Biden, who promised to implement vast amounts of stimulus if he was to be elected- something which is supportive of industrial metals.
Copper fell 1.4% to $6,720/t against Tuesday’s 5pm close, whilst nickel fell 1.6% to $15,120/t (Fastmarkets MB).
APEX survey rankings for SP Angel commodity forecasts: 2nd in Gold, 2nd in Copper, 2nd in Nickel, 1st in Tin, 5th in Iron ore
EV revolution, gold and other ideas (Interactive Investor): https://www.youtube.com/watch?v=ja0IdjszfCc
Metals Markets: Are they totally dependent on stimulus? (IG TV): https://youtu.be/TOiSwRpgfKM
Tesla Battery Day (IG TV): https://youtu.be/8su0PtyZLIM
SolGold* interview: : https://youtu.be/wK3SDPKADgM
Stock ideas (VOX, 21/10/20): https://www.voxmarkets.co.uk/media/5f913cebb9f74a03c9dfcb4d/?context=/listings/LON/AAZ/multimedia/
(VOX, 14/10/20): https://audioboom.com/posts/7705483-john-meyer-talks-the-imf-anglo-asian-mining-orosur-mining-scotgold-resources
*SP Angel act as nomad or broker or nomad and broker to companies mentioned in the above videos.
Dow Jones Industrials +2.06% at 27,480
Nikkei 225 +1.72% at 23,695
HK Hang Seng -0.21% at 24,886
Shanghai Composite +0.19% at 3,277
China – Growth momentum builds up in October according to a Caixin survey of private businesses.
Caixin Manufacturing PMI: 53.6 v 53.0 in September.
Caixin Services PMI: 55.7 v 54.5 in September.
Caixin Composite PMI: 56.8 v 54.8 in September.
Chinese authorities allegedly planning to discourage lenders from using Ant Group platform after abruptly pulling the fintech giant’s $35bn IPO on Tuesday (Bloomberg).
Regulators are considering introducing a minimum percentage of the loan that platform operators need to provide themselves.
The proposal is for 30% at least meaning many Ant’s existing transactions render non-compliant with the Company currently keeping only 2% of loans on its balance sheet.
Eurozone – Weak services sector continues to weigh on general economic sentiment in the single currency zone with growth stalling in October final Composite PMI data showed.
Stricter restrictions implemented in Eurozone countries lately are likely to see further deterioration in the business activity in coming months.
Markit Eurozone Manufacturing PMI: 54.8 v 53.7 in September.
Markit Eurozone Services PMI: 46.9 v 48.0 in September.
Markit Eurozone Composite PMI: 50.0 v 50.4 in September.
Peru – Copper output declines 11% in September
The second largest copper producing nation after Chile saw copper production fall to 172kt compared to 194kt in August and 204kt September 2019.
Copper production fell due to maintenance at some mines, virus-related labour reductions and a blockade at Las Bambas.
Peru zinc production rose 12.1% YoY to 134kt.
Gold production rose 2.9% YoY to 7.2 tonnes.
Baltic Index falls to a four-month low on Tuesday
The main sea freight index fell 1.6% to 1,263 on Tuesday, its lowest level since June, due to lower rates across all vessel segments as Chinese shipping demand falls (Hellenic Shipping News).
US$1.1669/eur vs 1.1671/eur yesterday. Yen 105.00/$ vs 104.63/$. SAr 16.302/$ vs 16.121/$. $1.293/gbp vs $1.287/gbp. 0.708/aud vs 0.708/aud. CNY 6.714/$ vs 6.691/$.
Gold US$1,892/oz vs US$1,893/oz yesterday
Gold ETFs 110.9moz vs US$110.9moz yesterday
Platinum US$857/oz vs US$865/oz yesterday
Palladium US$2,254/oz vs US$2,243/oz yesterday
Silver US$23.59/oz vs US$24.10/oz yesterday
Copper US$ 6,714/t vs US$6,789/t yesterday - Candelaria workers reject Lundin’s latest wage offer on Tuesday
Members of one of the two unions on strike rejected the company’s latest offer, with 96% of the Mine Workers Union opting to continue a strike which began on the 8th of October.
Aluminium US$ 1,858/t vs US$1,877/t yesterday
Nickel US$ 15,115/t vs US$15,275/t yesterday
Zinc US$ 2,526/t vs US$2,551/t yesterday
Lead US$ 1,805/t vs US$1,806/t yesterday
Tin US$ 17,970/t vs US$17,955/t yesterday
Oil US$39.8/bbl vs US$39.1/bbl yesterday
Markets have started higher today as investor optimism rises ahead of the US presidential election results which appear to be dragging on at the time of writing
The three main share indexes in the US all gained ground yesterday, reversing course after sharp falls last week
Oil prices also turned positive in US trading hours, after earlier hitting a five-month low, following fresh virus-induced lockdowns
The falls followed countries including the UK, France and Germany increasing restrictions
The news hit financial markets, worried that the new lockdown measures would further dent economic growth and cause demand for oil to slump
In Asia trading hours, the price of Brent crude fell to a low of US$35.74/bbl, a level not seen since late May
But it later recovered, rising more than 3%, helped by strong manufacturing data
The price of US crude oil was also hit hard, falling as much as 7% on Monday to a low of US$33.64/bbl before also rising more than 3%
But the price of Brent, the main benchmark for oil prices, remains down 45% from the start of the year
The virus-induced slump has weighed heavily on energy companies, with BP and Shell among those announcing thousands of job cuts this year
BP plans to cut 10,000 jobs after a slump in demand while Shell has said it expects to cut 7,000 to 9,000 jobs
Exxon Mobil last week said it planned to cut 14,000 jobs - or about 15% of its global workforce
Elsewhere, Aramco reported a net profit of US$11.8bn for the third quarter of 2020, down by 44.6% on the year as low oil prices continued to bite into its financial performance
The company also said it had free cash flow of US$12.4bn at the end of the three-month period and declared a dividend of US$18.75bn for the quarter
For the first nine months of the year, the impact of low oil prices and depressed demand was stronger
Net profit was down by close to 49% to US$35bn
With regards to oil production, the Company reported an average daily of 9.2MMbopd for the first nine months of the year as it continued capping output in compliance in line with the OPEC+ agreement
Earlier this year, Aramco declared an annual dividend of US$75bn
That amount, however, will not be sufficient to cover the Saudi budget deficit, Moody’s stated in a report last month
Natural Gas US$3.046/mmbtu vs US$3.175/mmbtu yesterday
Natural gas futures are down sharply for a second session as bearish intermediate (11-15 day) weather forecasts outweighed continued strong liquefied natural gas export levels
Bespoke Weather Services said warmer revisions to both the domestic and European forecasts for the first half of November, and hints that a warmer regime can roll on into the second half of the month
This will serve to minimise the demand outlook and put downward pressure on futures
Both American and European models have lost 10-12 gas-weighted degree days (GWDD) from earlier weekend forecasts, turning decidedly bearish
Additionally, production continued to claw back following the shutdowns caused by Hurricane Zeta about a week ago
The Category 2 storm made landfall on 28 October southwest of New Orleans
About 45% of natural gas produced in the Gulf of Mexico was taken offline ahead of the storm
By midday Monday, that figure had declined to 16%, the Bureau of Safety and Environmental Enforcement reported
Iron ore 62% Fe spot (cfr Tianjin) US$113.0/t vs US$114.1/t
Chinese steel rebar 25mm US$569.5/t vs US$571.5/t
Thermal coal (1st year forward cif ARA) US$54.6/t vs US$54.3/t
Coking coal futures Dalian Exchange US$120.3/t vs US$122.7/t
Cobalt LME 3m US$32,835/t vs US$32,835/t
NdPr Rare Earth Oxide (China) US$50,044/t vs US$49,918/t
Lithium carbonate 99% (China) US$5,362/t vs US$5,380/t
Ferro Vanadium 80% FOB (China) US$27.5/kg vs US$27.7/kg
Antimony Trioxide 99.5% EU (China) US$5.3/kg vs US$5.3/kg
Tungsten APT European US$220-225/mtu vs US$220-225/mtu
Graphite flake 94% C, -100 mesh, fob China US$440/t vs US$440/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,275/t vs US$2,275/t
Tesla fined $14m for battery recycling noncompliance
Germany has issued Tesla the fine after it said the automaker failed to comply with battery recycling duties, although Tesla has disputed the allegations in a filing with the SEC.
Tesla believes that the issue is only administrative, saying “We have filed our objection and it is not expected to have a material adverse impact on our business," (Automotive News Europe).
Transparent solar cells could hold key to ‘personalised energy’ albeit a tint
Scientists from Incheon National University in the Republic of Korea have designed a way of harnessing the potential of metal oxide transparent photovoltaic (TPV) by inserting an ultra-thin layer of silicone between two transparent metal-oxide conductors.
They believe that this takes us towards the goal of a sustainable green future with off the grid living, through the idea of “personalised energy” which would make on site energy generation possible.
This could mean that solar panels could be put into windows, cars, mobile screens and other items and directly used by the individual.
TPV solar cells are transparent versions of the traditional solar cell which use ‘invisible’ light that falls in the ultraviolet range.
Traditional solar cells can be the “wet type” (solution based) or the “dry type” (made of metal oxide semiconductors). The dry type is a bit more reliable, eco-friendly and cost efficient, and metal oxides are well suited to make use of the UV light.
The design with the Si film has three benefits. It allows for the utilisation of longer wavelength light; it results in an efficient photon collection; and it allows for the faster transport of charged particles to the electrodes. It may even be able to generate electricity in low light situations.
They are now looking to take the design further by using innovative materials like 2D semiconductors, nanocrystals of metal oxides, and sulphide semiconductors.
Conclusion: This is not new technology, or a new development and we suspect the cells will always require a brown or red tint meaning that the cells are not completely transparent.
SolGold* (LON:SOLG) 32.05p, Mkt Cap £655m – Initial assay results from Porvenir drilling
Solgold reports assay results from the upper portion of its first hole at Porvenir which show an average grade of 0.49% copper and 0.27g/t gold (0.69% copper equivalent -CuEq) between of depths of 10-580m in hole PDH-20-001.
“Assay results from 580m to end of hole at 909.3m remain pending”. Previously, Solgold announced that hole PDH-20-001 had been completed in “weak to moderate mineralisation”.
The company reports higher grade portions of mineralisation within the assays reported today, including:
A section of 188m between 392-580m depth which averaged 0.56% copper and 0.23g/t gold (0.73% CuEq); and
106m at an average grade of 0.67% copper and 0.25g/t gold (0.86% CuEq between 474-580m depth.
The assay results for the lower section of hole PDH-20-001 are expected later this month and “assays received to date confirm the potential for the presence of a large strongly mineralised porphyry system at Cacharposa as indicated by previously reported visual estimates”.
We comment that the 106m long section to 580m is the deepest assayed so far and appears to average the highest average grade so far within the hole. While we caution that drawing firm conclusions from this limited data in the first hole at Cacharposa is clearly premature, it increases anticipation for the results from the lower part of the hole.
The hole was drilled at an angle of 55⁰ towards the east in order to assess the sub-vertical Cacharposa Intrusive Complex which is thought to dip at around 85-90⁰ to the west and hence, at this stage there remains some uncertainty as to the true widths of the intersections but Solgold sys that they are “expected to be approximately 55-60% of the down-hole lengths”.
Solgold explains that “PDH-20-001 tested the eastern limits of the Cacharposa porphyry system and SolGold geologists interpret that the hole passed across the upper periphery of the core of a large, strongly mineralised porphyry copper-gold system. PDH-20-001 passed beneath outcropping surface mineralisation in Cacharposa Creek that returned an open-ended rock-saw channel assay result of 147.8m @ 0.69% CuEq (0.43 g/t Au, 0.37% Cu) including, 82.63m @ 1.08% CuEq (0.71 g/t Au, 0.55% Cu)”.
Solgold’s second hole testing the Cacaharposa porphyry is currently at a depth of 839.9m and is being drilled from the same location as PDH20-001 at a steeper angle of 75⁰ in order to test the core of the intrusion and previous announcements have included drill core photographs of mineralisation similar to those released for hole PDH-20-001.
CEO, Nick Mather, commented that “The assay results so far for the first hole at Porvenir are highly encouraging, indicating a large and complex mineralising copper gold porphyry system. In comparison to the first hole at Alpala, the Cacharposa target at Porvenir presents longer and better results, an excellent start to the Porvenir campaign”.
Conclusion: Initial assay results from the upper part of Solgold’s first drill-hole at Porvenir confirm an average grade of 0.49% copper and 0.27g/t gold (0.69%CuEq) between down-hole depths of 10-580m with results for the lower section of the hole to 909m expected later this month. The hole was completed in mineralisation and the second hole of the campaign, targeted to intersect the core of the intrusion is currently at a depth of approximately 840m having intersected visually similar mineralisation in drill core. Solgold has previously announced that it is stepping up the drilling at Porvenir to a 50,000m campaign with additional rigs scheduled on site later this month.
*SP Angel act as financial advisor and broker to SolGold
Talga Resources* (ASX:TLG) – A$1.12, Mkt cap £296m – UK funding and LKAB / Mitsui intent to help develop Swedish battery anode project
Talga Resources report the execution of a non-binding Letter of Intent between LKAB, Mitsui and Talga to jointly develop Talga’s Swedish battery anode project.
Talga also report the receipt of A$1.8m in UK Government Grants to complete a feasibility into the commerciality of a Talga UK Talnode®-C Anode Refinery.
The firm further reports that it has also been awarded A$520,000 in co-funding from Innovate UK under the Automotive Transformation Fund.
This funding is to fast-track development of the Talnode®-Si silicon anode developed in Cambridge under the UK’s Faraday SAFEVOLT program.
Production of Talnode®-C in the UK will share natural flake graphite feedstock with Talga’s Swedish facility to come from the proposed Vittangi graphite mine.
LKAB operates giant iron ore mines at Kiruna and Svappavaara, close to the proposed Vittangi graphite mine.
Their involvement is helpful as LKAB has years of experience in managing local issues such as Reindeer migration rights which is often problem for mines in Sweden.
The LKAB / Mitsui venture is to jointly develop the Vittangi anode project in Sweden following the results of a detailed Feasibility Study due in Q1 2021.
Vittangi mine: Talga are scrapping Stage 1 and are going straight to Stage 2 in their planning for the new Vittangi graphite mine in Sweden.
Stage 2 takes the mine straight to 19,000tpa of Talnode®-C with commissioning originally proposed for 2023 with estimated annual sales of US$210mpa
A scoping study is underway on a significant expansion of production at Vittangi, based on the newly discovered Niska deposits. The upgraded study is due by end-November,
The move is in response to exceptional indications of demand from European Automotive and battery manufacturers for Talga’s accredited anodes.
The anodes have been developed in the UK at Cambridge and using the Warwick Automotive battery testing facilities.
Conclusion: Talga’s Talnode®-C and Talnode®-Si anode products are in significant demand. Talnode®-C has been through exhaustive accreditation, often a significant barrier to entry for entrants into the anode market. The Talnode®-C is a value added product with significant additional value for Talga.
Talnode®-Si development is at an earlier stage but its potential to enable significantly greater battery capacity along with faster charging could also result in the development of a second major value-added product line for Talga.
*SP Angel have previously acted for Talga Resources
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
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
Natural Gas, Uranium, Iron Ore
Bloomberg OTC Composite
Lithium Carbonate, Ferro Vanadium, Antimony