SP Angel . Morning View . Friday 13 11 20


Bacanora Lithium (LON:BCN) – Ganfeng exercises option to increase investment in Sonora Lithium project

Chaarat Gold* (LON:CGH) – BUY – Production guidance reiterated after Armenia/Azerbaijan agree to a ceasefire

Endeavour Mining (CVE:EDV) – Q3 report declares first dividend as board mull London listing

Gemfields (LON:GEM) – Sale process for SPM

Panthera Resources (LON:PAT) – Bido field exploration plans

Serabi Gold* (LON:SRB) – Q3 results hint that worst impact of Covid19 may be over with production expected to start t recover in Q4

Vast Resources* (LON:VAST) – Baita Plai exploration target expanded to 3.2-5.8mt


Gold more attractive to central banks than ever despite Q3 sell-off

The Covid-19 pandemic has led to 23% of central banks viewing gold as a more attractive asset, while the remaining 77% responded that their view on gold had not changed, according to a report carried out by Central Banking and Invesco.

Central bankers typically expect bank gold holdings to increase over the next 12 months, with no respondents expecting a decrease and purchases on the global market being the most popular means of obtaining gold.

Reserve managers cited ‘diversification’ as the most relevant factor for holding gold.

Aside from central banks, investment demand for gold has been huge this year as investors still see bullion as a key safe-haven, with year-to-date flows into gold-backed ETFs amounting to 1,003t by Q3 according to the World Gold Council.

Further uncertainty surrounding Covid-19 along with central banks reaffirming their appetite for bullion indicates prices are going to be well-supported going into 2021- with many economists predicting that the economic fallout from Coronavirus is going to be most felt in Q2 2021.

On the supply side, social-distancing at mine sites and refineries along with full blown shutdowns at others is a possible scenario if further waves of Covid-19 flare up in areas.

The total supply of gold fell 3% YoY in Q3 to 1,224t- despite the 6% growth in gold recycling in the quarter.


COVID-19 – breakthrough as hospitalised patients who inhale MS drug SNG001 are twice as likely to recover within two weeks

Of the hospitalised patients who inhaled nebulised interferon beta-1a (SNG001) just 13% needed intensive care vs 22% who needed a placebo

SNG001 uses naturally-occurring protein interferon beta to help fight viruses

This and other treatments are reducing mortality rates, the length of hospitalisation and hopefully the incidence of Long-Covid


The Passing of Patrick Edward Hamar Paines

It is with great regret that we report the passing of Patrick Paines 3rd February 1967 – 8th November 2020

Patrick was undoubtedly the funniest, kindest, most generous salesman we ever worked with.

He lived his City life to the full and those fortunate enough to know Patrick will never forget him.


Recent interviews:

VOX – 11/11/20: https://www.voxmarkets.co.uk/media/5fae36b5b9f74a03c9dfcc02/?context=/listings/LON/BMN/multimedia/

US Election, China growth policies Solgold*, Mkango*, Rainbow Rare Earths*: https://youtu.be/YKk5-kVpVGE

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

*SP Angel act as nomad or broker or nomad and broker to companies mentioned in the above videos.


APEX survey rankings for SP Angel commodity forecasts: 2nd in Gold, 2nd in Copper, 2nd in Nickel, 1st in Tin, 5th in Iron ore.

The survey takes forecast from 21 analysts from commodity traders, banks, economics and specialist commodity forecasters


Dow Jones Industrials -1.08% at 29,080

Nikkei 225 -0.53% at 25,386

HK Hang Seng -0.12% at 26,139

Shanghai Composite -0.86% at 3,310



US – Powell warned of risks to growth outlook amid a continuing spread of the virus in the US and despite “encouraging” recent vaccine related news.

New daily US virus cases is over 160k and hospitalisations are reported to be at their highest.

Consumer prices inflation missed estimates marking the weakest point in five months in October.

Components recorded mixed performance with higher airfares and new car prices helping to offset declines in costs of gasoline, medical care, motor-vehicle insurance and clothing, according to Bloomberg.

Food inflation picked up the most since June as grocery costs stabilised and consumers continued to dine out.

Annual CPI excluding food and energy pulled back deeper below the 2% mark that matches subdued economic outlook with GDP down 3% on pre-pandemic levels as of Q3/20.

On a more positive front, weekly jobless report showed application for state unemployment benefits dropped by the most in five weeks pointing to a gradual recovery in the labour market.

Continuing claims continued to decline falling by 436k to 6.79m in the week to 31 October.

Both readings beat market estimates.

CPI (%mom): 0.0 v 0.2 in September and 0.1 est.

CPI (%yoy): 1.2 v 1.4 in September and 1.3 est.

Weekly Jobless Claims (‘000): 709 v 757 the previous week and 731 est.

Continuing Claims (‘000): 6,786 v 7,222 the previous week and 6,825 est.


Eurozone – GDP numbers showed the single currency zone recouped some of its losses in Q3 (+12.6%qoq v -11.8%qoq), although, the size of the economy was down 4.4% compared to pre-pandemic levels.


UK – Another week of Brexit negotiations is about to end with no clear agreement between two sides and less than 50 days before the UK is due to leave the single market.

Three key issues that have been the focus of discussions for the past eight months include the level playing field for business, access to UK fishing waters and how any accord is enforced, Bloomberg reports.


Spain – The nation remained in deflation with annual CPI posting another negative reading in October (-0.9% v -0.6 in September).


15 Asia-Pacific nations including China are expected to sign the world’s largest free-trade agreement this weekend, according to Bloomberg.

The Regional Comprehensive Economic Partnership which includes nations stretching from Japan to Australia and New Zealand (but excludes India) will reduce tariffs, strengthen supply chains with common rules of origin, and establish new e-commerce rules.


Mexico – The central bank board voted 4-1 to leave rates unchanged at 4.25% as inflation held above the target ceiling for three straight months.

Rates came down from 8.25% over straight 11 meetings beginning in August 2019.

Although, inflation has been on the rise almost doubling since April hitting 4.1% in October, the third consecutive month above the ceiling of the bank’s target range of 3% +/- 1pp.


Australia – China continues to exercise its trade control muscles as it suspends log imports from a second Australian state

The specific targeting of Australian states marks a new and sinister direction in China’s use of its buying power to influence political decisions.

We suspect the move is designed to put further pressure on Australia to adopt Huawei 5G technology.


UK – Government approved £1.7bn tunnel to run under Stonehenge to hide the passing main road

We wonder why the Government can’t plan or approve a tunnel to run from West or central London to Heathrow, the UK’s main airport.

The bridges on the main road from London to Heathrow have been close to collapse for many years, the capacity of the road is insufficient and the infrastructure is a mess, so building a road to protect the view over a bunch of ancient stones in the West Country should not be the government’s main infrastructure priority in our view. Not to mention the indefinite closure of Hammersmith Bridge.


Peru – Volume of exported mining products fell -40.4% in September YoY

Shipments of copper fell -47.5%, gold -16%, zinc -43.2% and iron ore -99.9%.

Shipments of tin and silver both increased by 19.2%.

Peru’s agricultural exports volume decreased by -16.3% due to lower coffee sales which fell -13.8%.



US$1.1814/eur vs 1.1786/eur yesterday.  Yen 105.09/$ vs 105.29/$.  SAr 15.632/$ vs 15.667/$.  $1.316/gbp vs $1.329/gbp.  0.724/aud vs 0.726/aud.  CNY 6.617/$ vs 6.628/$.


Commodity News

Precious metals:         

Gold US$1,878/oz vs US$1,865/oz yesterday – Turkmenistan – President unveils 19ft golden dog statue

President Berdymukhamedov has unveiled a 19ft statue of the Alabay breed dog statue in the capital Ashgabat on Tuesday (BBC).

It is quite possible that the president hounded the country’s central bank for the gold, who according to World Gold Council database, do not make public the extent of their holdings. There is little doubt who is the biggest dog in Turkmenistan.

Gold ETFs 110.5moz vs US$111.0moz yesterday

Platinum US$888/oz vs US$867/oz yesterday

Palladium US$2,349/oz vs US$2,343/oz yesterday

Silver US$24.22/oz vs US$24.08/oz yesterday


Base metals:  

Copper US$ 6,956/t vs US$6,918/t yesterday

Yangshan copper premium fell to $46/t its lowest since April 2017 suggesting demand for copper imports into China is falling (Reuters).

This may be due to rising copper smelting capacity in-country and is despite recent record monthly imports.

Aluminium US$ 1,938/t vs US$1,927/t yesterday

Nickel US$ 15,890/t vs US$15,965/t yesterday

Zinc US$ 2,629/t vs US$2,617/t yesterday – zinc concentrate market forecast to move from deficit this year into surplus in 2021 (Antaike)

Lead US$ 1,910/t vs US$1,873/t yesterday

Tin US$ 18,305/t vs US$18,265/t yesterday



Oil US$42.9/bbl vs US$44.0/bbl yesterday

Natural Gas US$2.980/mmbtu vs US$3.022/mmbtu yesterday



Iron ore 62% Fe spot (cfr Tianjin) US$119.9/t vs US$120.8/t

Chinese steel rebar 25mm US$617.5/t vs US$617.0/t

Thermal coal (1st year forward cif ARA) US$57.1/t vs US$55.7/t – Almost half of thermal coal companies appear to plan to ignore climate pledge

Almost 50% of companies involved in the thermal coal industry are expected to defy the global climate change commitments by increasing their involvement in coal in the next few years according to a study by campaign group Urgewald. 

Almost 1,000 companies could be blacklisted by investors as they remained tied to the thermal coal value chain almost four years after the Paris climate agreement came into effect. 

About 440 of these companies intend to build coal plants, mines and other infrastructure in the next few years with just 25 setting a date to phase out their use of coal. 

The global coal exit list includes all energy firms that either hold more than 5GW of coal fired power plant capacity, produce 10m tonnes of thermal coal a year, or rely on coal for a fifth of their energy generation or revenue.  

It also includes some companies from outside of the energy industry who plan to invest in coal power.  

Since the Paris climate agreement came into effect, the world’s coal fired power plant capacity has grown by 137GW due to financial support for power plants mainly from China. 

The pipeline for new coal fired power plants has reached 522GW worth of coal fired power plants with half of these planned in China.  

Coking coal swap Australia FOB US$114.3/t vs US$117.3/t



Cobalt LME 3m US$32,835/t vs US$32,835/t

NdPr Rare Earth Oxide (China) US$52,140/t vs US$52,031/t

Lithium carbonate 99% (China) US$5,592/t vs US$5,580/t

Ferro Vanadium 80% FOB (China) US$27.0/kg vs US$27.0/kg

Antimony Trioxide 99.5% EU (China) US$5.4/kg vs US$5.4/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$2,300/t vs US$2,275/t

Spodumene 6% Li2O min, cif (China) US$375/t vs US$385/t


Battery News

Xpeng posts mixed Q3 numbers

Revenue $293m, up 343% YoY, above consensus estimates of $287.17m. Figures converted at Rmb6.78/USD

$279.6m of revenue from vehicle sales, up 376% YoY. Vehicles deliveries up 266% YoY and 166% sequentially to 8,579 units.

Achieved first positive gross profit quarter, gross margin moving from -10% to 4.6% in the quarter.

Non-GAAP net loss $127m compared to $110m last year and a non-GAAP loss of $113 in Q2.

Company forecast 10,000 vehicles deliveries in Q4, a 210.8% increase YoY and $332m revenue vs $358m consensus.


Construction begins on UK battery project

Fotowatio Renewable Ventures (FRV) and Harmony energy have partnered on the Contego Project, a 34MW/68MWh storage battery in West Sussex, UK.

The battery is composed of 28 Tesla Megapack lithium-ion batteries with construction set to begin on the project this month.

Construction is scheduled to complete in 2021. It will be one of the largest utility battery projects in the UK when completed.

FRV and Harmony have worked together before on the Holes Bay battery storage project in Dorset, the first of its kind in the UK. It utilizes 6 Tesla Megapack batteries with a total capacity of 7.5MW/15MWh.

FRV is involved in 59 renewable energy projects globally and plans to invest $4b to achieve an eight-fold increase in the installed capacity of its projects worldwide by 2024.

Harmony Energy is an independent developer of utility scale battery energy projects in the UK, with 1.03GW of energy storage capacity across 13 projects.


Mercedes Benz to source battery metals sustainably

Mercedes Benz has committed to sourcing its cobalt and lithium for EVs from certified mining sites.

The Company has signed up to the ‘Standard for Responsible Mining’ and hopes to lead the ‘Initiative for Responsible Mining Assurance’ where it will work alongside mining projects in higher risk nations to improve working conditions and workers rights. If this fails the Company will exercise the option to exit that part of the supply chain.

Mercedes is working towards removing cobalt from its batteries, the Company has 10% less cobalt in its batteries today compared to earlier iterations.

OXIS Energy* is working within a Mercedes manufacturing site to build a new Lithium Sulfur production line in Brazil. The idea is for OXIS batteries to power the next generation of electric busses in Brazil. The project is being largely funded by the Brazilian state. SP Angel acts for OXIS Energy.


Company News

Bacanora Lithium (LON:BCN) 35.2p, Mkt Cap £79m – Ganfeng exercises option to increase investment in Sonora Lithium project

Bacanora reports Ganfeng has exercised its option to increase investment in the Sonora Lithium Ltd.

Sonora is targeting production in 2023 subject to financing.

Ganfeng is exercising its right to subscribe £21,883,485 worth of shares at 29.59p so long as Bacanora remains as project operator and Ganfeng leads the EPC on the Sonora Project.

The move takes Ganfeng’s stake in the Sonora Lithium project to 50% from 22.5%.  

Ganfeng recently completed its flow sheet design test work for the production of battery grade lithium from the samples provided by the Pilot Plant.

The group is now integrating these results into a larger scale design, and remains on schedule to deliver its final engineering packages at the end of Q4 2020, whilst a working with its equipment suppliers to determine equipment delivery times and process guarantees.

Bacanora therefore remains on schedule to commence initial site works at Sonora in H1 2021, subject to completion of financing, which would enable commencement of production at the plant in 2023.

The Company has also updated the market on Covid-19 in the Sonora district, saying cases continues to fall in the Sonora district of Mexico and lockdown restrictions are slowly being lifted as the company continues to remain vigilant.

New health and safety protocols and social distancing will remain in place at the Pilot Plant for the foreseeable future but will not impact the Company’s ability to continue to work on site.

Ganfeng has an offtatake agreement with Bacanora for its lithium carbonate feedstock.


Chaarat Gold* (LON:CGH) 26p, Mkt Cap £142m – Production guidance reiterated after Armenia/Azerbaijan agree to a ceasefire


A peace deal brokered by Russia was agreed between Azerbaijan and Armenia in regards to the Nagorno-Karabakh region on 9 November.

Both sides agreed to a ceasefire and Russia is to deploy peacekeepers to the area for an initial period of five years and a potential extension for another five.

Operationally, the Company managed to minimise the impact of the conflict focusing on higher grade areas of the Kapan mine and treating more of third-party ore material.

Concentrate shipments continued as normal.

The Company reiterated its annual production guidance for 55koz GE this year.

*SP Angel acts as Broker to Vast Resources


Endeavour Mining (CVE:EDV) C$30, Mkt Cap C$5.0bn – Q3 report declares first dividend as board mull London listing

West-African gold producer Endeavour Mining have released its financial and operating results for Q3 2020, with the miner declaring its first annual dividend.

Gold production across Endeavour’s assets increased 64% QoQ and 35% YoY to 244,000oz in the three months ended 30 September 2020 due to the addition of the Mana and Boungou mines, as well as increased production at Houndé, Karma and Agbaou.

Production is expected to increase further, with management anticipating Q4 being the strongest of the year, due to the restarting of operations at Boungou and further ramp-up at Hounde.

The company recorded record operating cash flow before working capital of $223m, or $1.37/share for Q3 compared to $85m in Q2 and $110m YoY.

Adjusted Net Earnings amounted to $72m or $0.44m/share for the quarter compared to $53m in Q2 and $33m YoY.

Endeavour is on track to achieve its full year pro forma production guidance of 995-1,095Koz, and has declared a first dividend of $60m of $0.37/share- representing a yield of 1.6%.

The miner has extended its life of mine and production outlook at its Ity and Hounde operations. Houndé is expected to produce an extra 106,000 ounces of gold per year on average over the next five years whilst Ity is seen producing an additional 170,000 ounces over the next 10 years.

With respect to the Secondary listing, Sebastien de Montessus, President and CEO, commented: “The progress we have made across our business over recent years is bearing fruit as we have created a compelling investment proposition. We are now focused on further enhancing our capital markets appeal, by paying dividends and evaluating a secondary listing, both with a focus on driving incremental investor demand through notably increased index inclusions.”

News broke on Tuesday that Endeavour is considering a merger with Teranga Gold, a fellow West African Producer with a market cap of C$2.2bn.


Gemfields (LON:GEM) 6.25p, Mkt Cap £73.2m – Sale process for SPM

Gemfields reports that it has commenced a process which could lead to the sale of its effective 6.54% direct and indirect interest in Sedibelo Platinim (SPM) which owns and operates the Pilanesburg Platinum mine in South Africa.

The company says that “In its financial year ending 31 December 2019, SPM dispatched and sold approximately 127,000 4E ounces (comprising platinum, palladium, rhodium and gold) and generated EBITDA of approximately USD 13 million”.

Gemfields has previously stated that it does not see SPM as a core part of its business and when reporting its interim results in September it showed  an impairment charge of US$12.5m against the SPM business while reporting an overall net loss of US$56.7m for the six months to 30th June 2020 as its core gemstone business battled Covid19 induced restrictions which curtailed its ability to hold gemstone auctions.


Panthera Resources (LON:PAT) 9.5p, Mkt Cap £8.1m – Bido field exploration plans

Panthera Resources reports plans to start an initial soil sampling and mapping programme at its Bido site approximately 150km from the capital, Ouagadougou  in Burkina Faso later this month with the initial phase of work expected to be completed by late January 2021.

The work will focus on an area of approximately 12 km2 within the 100km2 Bido licence area and is expected to generate around 1,350 geochemical samples “to define and rank drill targets for a drilling programme which is expected to commence in the first half of 2021”.

The company explains that plans to follow up “Several high order gold in soil anomalies and artisanal workings … [which] … are located on the northern edge of the survey area” and were postponed as a result of the onset of the wet season and the application of measures to contain the spread of Covid19.

Previous exploration of the area by the Burkina Faso government and commercial explorers included broadly-spaced drilling results at Kwademen with reported intercepts including 16m at an average grade of 1.07g/t gold from 69m depth, 23m averaging 1.53g/t from 143m depth and 10.4m averaging 2.14g/t from 191m depth as well as several narrower, higher- grade intersections.

“Another zone of artisanal gold mining activity is located to the south of Kwademen, possibly associated with a fault offset continuation of the main Kwademen mineralisation”.

Conclusion: Panthera Resources plans to start early stage geochemical exploration, deferred from earlier in the year, of the Bido licence in Burkina Faso later this month. Results may not be available until after completion of the programme late in January 2021.


Serabi Gold* (LON:SRB) – 86p, Mkt Cap £50.4m – Q3 results hint that worst impact of Covid19 may be over with production expected to start t recover in Q4

Serabi Gold reports a 175% rise in after tax profits for the 9 months ending 30th September to US$7.8m (2019 – US$2.8m profit).

Revenues over the year-to-date increased by 3.4% to US$45.4m (2019 – US$43.9m) aided by a higher average gold price of US$1,707/oz with an average US$1,881/oz during Q3 (2019 – US$1,351 YTD and US$1,472/oz in Q3).

EBITDA for the nine months to 30th September increased by 25% to US$ 15.7m and we estimate net  free cash-flow generation for the nine months of approximately US$3.8m leaving the company with a net 30th September cash balance of approximately US$11.0m.

The results derive from the production of 24,478oz of gold at a cash cost of US$1,013/oz and an all-in-sustaining cost (AISC) of US$1,298/oz (2109 – 29,878oz at a cash cost of US$844/0z and AISC of US$1,078/oz).  Gold production for the quarter amounted to 7,224oz of gold.

Over the period, Serabi Gold treated 130,835t of ore at an average grade of 5.73g/t gold compared to the 132,540 tonnes at an average grade of 7.08g/t during the first nine-months of 2019.

When it reported its quarterly production results for Q3 in October, Serabi Gold explained that operational restrictions including reduced levels of workforce to contain the Covid19 pandemic meant that it had needed to mine and treat “lower grade ore that might otherwise have been stockpiled” in order to maintain throughput.

The company confirms the expectation of 8,000oz of gold production during the final quarter of 2020 which it announced in October suggesting that output is expected to increase by around 10% over the final quarter.

Serabi Gold says that “The third quarter was probably the worst period for the pandemic, to date, in Brazil, with private operations suspended and listed companies reducing operations significantly. However, the Company has managed to keep its mines operational and maintain production and cash flow throughout.  By the end of September 2020, with almost a full workforce complement back at the mine sites, many ancillary activities were resumed.  We anticipate fourth quarter production being approximately 8,000 ounces resulting in full year production of approximately 33,000 ounces.”

Conclusion: Serabi Gold has adapted to the operational challenges of Covid19 containment and, aided by improved gold prices has increased year-to-date after-tax profits by 175%. The company is expecting a modest recovery in gold output during the final quarter leaving full year gold production only around 1,000oz -4,000oz lower than it indicated in July.

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


Vast Resources* (LON:VAST) 0.17p, Mkt Cap £24m – Baita Plai exploration target expanded to 3.2-5.8mt

The Company updates the Baita Plai exploration target following the review of the historical exploration data that was only recently made available.

Updated exploration target includes 3.2-5.8mt of ore at 0.5-2.0% copper, 0.1-2.0% lead, 0.1-2.0% zinc, 40-80g/t silver and 0.2-0.8g/t gold.

This marks a revision on the previous estimate for 1.8-3.0mt at 0.5-2.0% copper , 0.1-2.5% lead, 0.1-2.5% zinc, 40-80g/t silver and 0.2-0.8g/t gold.

The revision is driven by expansion of the exploration target at the Antonio North skarn (200m north of the Antonio skarn that hosts most of the underground infrastructure) that expanded from estimated 0.2-0.5mt to 1.4-2.8mt.

New estimate is based on data comprising available historical assay results, logged lithologies and general plan data that was put together from data archives by the mine geologist and Craig Harvey (COO).

The data includes intersections from underground drilling as well as development works around edges of the Antonio skarn.

The Company is putting together a drilling programme targeting the Antonio North skarn with a series of diamond drill holes from 15 level.

Conclusion: A review of the historical data see the Company nearly doubling its Baita Plai exploration target driven by an increase at the Antonio North mineralised zone. Antonio North skarn offers a potential to expand the existing Baita Plai mine life with close proximity of the target area and existing underground infrastructure assisting with the planned exploration drilling programme.

*SP Angel acts as Broker to Vast 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



SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London



*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.


Sources of commodity prices

Gold, Platinum, Palladium, Silver

BGNL (Bloomberg Generic Composite rate, London)

Gold ETFs, Steel


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


Oil Brent


Natural Gas, Uranium, Iron Ore


Thermal Coal

Bloomberg OTC Composite

Coking Coal




Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal


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