SP Angel . Morning View . Speculation over more Chinese stimulus lifts markets
Paul Kettle
SP Angel Research Note -4 min read
09:49, 11th September 2019

SP Angel – Morning View – Wednesday 11 09 19

Speculation over more Chinese stimulus lifts markets


MiFID II exempt information – see disclaimer below


Cora Gold* (CORA LN) – Zone B drilling returns good grades

Chaarat Gold* (CGH LN) – Funding update

Conroy Gold & Natural Resources (CGNR LN) – Clontibret gold prospect shows good gold and antimony grades

Syrah Resources (SYR AU) – Graphite production cut by Syrah Resources due to raw material oversupply at lower quality end of the market


Dow Jones Industrials





Nikkei 225





HK Hang Seng





Shanghai Composite





FTSE 350 Mining





AIM Basic Resources







US – Brent prices dropped more than 2% on Tuesday before regaining some of its lost ground after Trump fired national security adviser John Bolton.,

  • Ousting of Bolton has been interpreted as potentially leading to a less hawkish White House stance on Iran and Venezuela.
  • Crude prices bounced back as the data showed a drop in US oil inventories.


China – Editor of one of the state affiliated newspapers says China will implement measures to ease the impact of trade war.

  • The Global Times is a Chinese tabloid run by the People’s Daily, the flagship newspaper of the Communist Party.
  • Editor in chief Hu Xijin has said the paper voices opinions  that official sources can not.
  • Separately, Beijing released a list of goods approved for tariff exemptions in a goodwill move with new round of negotiations scheduled for October.
  • Although, the list did not include soybeans and pork, as many expected.


Germany – Angela Merkel rejected calls for increased fiscal stimulus saying red tape and planning is holding up investment.

  • Previously, the IMF called for Germany not to wait for an economic shock before increasing public investment.
  • “With the investment, and the finance minister touched on that yesterday, it’s currently not a lack of money… we have hundreds of thousands of apartments that could be built, we have roads, we have digital infrstructure… so, first we need to make sure the money is being spent,” Merkel told parliament during the second day of the budget debate.
  • The economy contracted 0.1%qoq in Q2 with many indicators suggesting Germany may be technically in recession in Q3.


Peruvian nationwide mining strike fails to make impact

  • A nationwide strike organised by mining unions in Peru failed to have the desired effect, as output has not been affected at mines in the country according to industry officials (Reuters).
  • The National Society of Mining, Petroleum, and Energy (SNMPE) said that the strike which started on Tuesday failed to draw large numbers of workers, and called it a “failure”.
  • Prolonged or heightened industrial action could affect metals markets as Peru is the world’s second-largest producer of copper, silver and zinc and mining accounted for 62% of total export values in 2017.



US$1.1034/eur vs 1.1049/eur yesterday.  Yen 107.82/$ vs 107.28/$.  SAr 14.688/$ vs 14.725/$.  $1.237/gbp vs $1.233/gbp.  0.687/aud vs 0.686/aud.  CNY 7.115/$ vs  7.102/$.


Commodity News

Gold US$1,490/oz vs US$1,494/oz yesterday - Gold could hit $2,000 in next two years, says Citigroup

  • The price of gold could hit $2,000 per ounce in the next two years, passing a level not seen since August 2011 when it reached $1,830.55/oz.   
  • According to Citi analysts, a combination of geopolitical tension, lower interest rates and the growing risks of recession could push the price of gold over the $2,000/oz mark.
  • The price is already up 17% this year-to-date, due in part to central banks buying more gold this year than any year in the past nine, according to the World Gold Council (FT). A record $15.7bn of gold was purchased in the first half of this year, led by Poland China and Russia.
  • Uncertainty regarding the dollar has led to countries such as Russia adopting a policy of “de-dollarisation” according to Alistair Hewitt, a director at the World Gold Council. Instead, central banks are attracted to gold as it is seen as a safe haven investment.

   Gold ETFs 79.2moz vs US$79.2moz yesterday

Platinum US$938/oz vs US$941/oz yesterday

Palladium US$1,564/oz vs US$1,546/oz yesterday

Silver US$18.10/oz vs US$17.98/oz yesterday


Base metals:   

Copper US$ 5,807/t vs US$5,835/t yesterday

Aluminium US$ 1,823/t vs US$1,803/t yesterday

Nickel US$ 18,150/t vs US$18,150/t yesterday

Zinc US$ 2,366/t vs US$2,319/t yesterday

Lead US$ 2,101/t vs US$2,093/t yesterday

Tin US$ 17,350/t vs US$17,305/t yesterday



Oil US$62.9/bbl vs US$62.7/bbl yesterday

Natural Gas US$2.591/mmbtu vs US$2.611/mmbtu yesterday

Uranium US$25.10/lb vs US$25.15/lb yesterday



Iron ore 62% Fe spot (cfr Tianjin) US$88.9/t vs US$89.0/t

Chinese steel rebar 25mm US$559.3/t vs US$559.9/t

Thermal coal (1st year forward cif ARA) US$68.6/t vs US$66.2/t

Coking coal futures Dalian Exchange US$223.8/t vs US$213.0/t



Cobalt LME 3m US$35,500/t vs US$35,500/t

NdPr Rare Earth Oxide (China) US$46,031/t vs US$46,086/t

Lithium carbonate 99% (China) US$7,028/t vs US$7,036/t

Ferro Vanadium 80% FOB (China) US$38.7/kg vs US$38.7/kg

Antimony Trioxide 99.5% EU (China) US$5.0/kg vs US$5.0/kg

Tungsten APT European US$195-205/mtu vs US$198-205/mtu


Battery News

Western Australia’s $300m lithium hydroxide plant begins production (Reuters)

  • The facility is the world’s biggest lithium hydroxide plant outside of China and began production on Tuesday.
  • Chinese lithium producer Tianqi Lithium will produce 48,000 tonnes per year once the second stage is complete. Tianqi are currently ramping up the first stage of production, which is expected to yield 24,000 tonnes 12-18 months from now.
  • Tianqi have put development of the second-stage of the facility on hold, due to weaker demand for battery raw materials in wake of Beijing altering subsidies for electric vehicles. Another key factor resulting in weaker lithium prices is the wave of new supply entering the market, namely in Australia, where six spodumene mines have commenced production in just three years according to CRU.


Company News

Cora Gold* (CORA LN) FOLLOW 7.8p, Mkt Cap £7.8m – Zone B drilling returns good grades

  • Assays from the latest drilling programme at Zone B, a 1,500m long prospect located 1,000m north of the Zone A along the Sanankoro mineral structure.
  • Selected results included:
    • 7m at 3.14g/t from 28m (oxide);
    • 11m at 3.27g/t from 76m (oxide);
    • 3m at 5.39g/t from 132m (sulphide).
  • New drilling results together with historical data increase confidence in the continuity of mineralised structure at Zone B.
  • The team is planning to continue drill test the area in the upcoming field season starting in early Q4.

Conclusion: Results show good continuity in gold mineralisation in the area with further exploration planned to start in the coming field season with a view to potentially identify economic ounces susceptible to open pit mining.

*SP Angel acts as Nomad and Broker to Cora Gold


Chaarat Gold* (CGH LN) FOLLOW 28p, Mkt Cap £117m – Funding update

  • The Company extended the maturity of the $10m loan to 31 Mar/20 (previously Aug/19) as well as increased the size of the facility by additional $7m to a total size of $17m.
  • The remaining terms of the loan remained unchanged including the 13%pa interest.
  • Labro Investments, a major shareholder in the Company, provided a loan guarantee for the full amount for 2% on the $17m outstanding.
  • The fee is payable within 30 days either in cash or in shares.
  • The Company has also drawn on $2.5m from the available Labro working capital facility.
  • The Company close the previously announced 20201 Convertible Bond raise to new subscribers with the total amount in issue of $19.68m at the moment including the recently raised $0.5m.
  • The team is in discussions with lenders regarding the funding of the $110m Tulkubash project having received a preliminary debt financing term sheet.
  • Funding is expected to be completed by the end of 2019 or early 2020.

Conclusion: The team received additional $9.5m in cash from its lenders as the Company continues to advance the Tulkubash Gold Project in Kyrgyzstan towards the completion of debt funding (Q4/19-Q1/20 targeted) and start of development works. Meanwhile, extensive drilling programme continues at Tulkubash extending the footprint of the identified gold mineralisation (16,000m targeted for step out drilling of total 20,000m budgeted for 2019) offering potential to grow the existing life of mine.

*SP Angel acts as Broker to Chaarat Gold


Conroy Gold & Natural Resources (CGNR LN) FOLLOW 5.7p, mkt cap £1.1m – Clontibret gold prospect shows good gold and antimony grades

  • Channel sampling in streams over the Clontibret gold prospect show a 90cm channel grading 3.1 g/t gold.
  • Another result from an upstream boulder also shows 3.9 g/t gold and 23.2% antimony.
  • Following a dry period, stream water levels dropped allowing channel sampling of the previously reported mineralised outcrop (announced 22 October 2018). A channel sample of the outcrop over 90cm returned 3.1 g/t gold.
  • Geologically, the structure hosting the mineralisation looks similar to the Clontibret gold deposit and to the nearby bedrock gold occurrence at Corcaskea.
  • Conroy reckons believes the presence of gold mineralisation in this area may be part of a a continuous mineralised zone between the Clontibret deposit and Corcaskea where trenching shows 16.5m grading 6.5 g/t gold and 12m at 4.9 g/t gold.
  • The old Clontibret antimony mine also shows gold in channel samples.

Conclusion: This is interesting news but investors should wait to see if the Conroy’s geologists can find more evidence to support the theory that the Clontibret and Corcaskea prospects join up and if there are gold and gold antimony deposits of sufficient grade for potential economic extraction.



Syrah Resources (SYR AU) - A$0.54, Mkt cap A$221m

Graphite – Production cut by Syrah Resources due to raw material oversupply at lower quality end of the market

  • Yesterday’s report by Syrah Resources made interesting readying prompting us to survey a number of graphite companies for their views.
  • We are still collating their replies but suffice to say, comments from other graphite producers and interested parties do not appear to entirely tally with the severe production cutback being enforced at Syrah’s Balama graphite mine in Mozambique.
  • Syrah’s shares fell from A$0.70 to A$0.46 yesterday but have since recovered to A$0.54 on the ASX today.
  • While we are not party to the negotiations between Syrah and its Chinese buyers we can speculate that things have not gone so well for Syrah in recent weeks / months.
  • Syrah indicated that Chinese buyers of graphite were holding back purchases due to currency weakness, rising local inventory levels and a fall in Electric Vehicle sales due to a reduction in EV subsidies in China.
  • They also cited competition from additional production from Madagascar and a seasonal increase in domestic Chinese production adding to market supply.
  • We speculate that Syrah may have pushed its Chinese buyers too hard too fast disrupting its negotiations.
  • Curiously other operators appear to be expanding sales into China indicating to us that this particular buyers strike may be specific to Syrah.
  • This may relate to Syrah’s product quality and specification which is at the low value end of the spectrum.
  • China is enforcing stricter environmental regulations restricting the use of hydrofluoric acid and potentially making the processing of Syrah’s low value product uneconomic and possibly very much more difficult to process.
  • We understand that this low value product may not be preferred by most Automotive battery anode producers with Syrah material sold to a low-end battery manufacturer which is seen as the lowest price buyer.
  • The rest of Syrah’s material is for other industrial uses which are impacted by the US / China trade war.
  • We are told by other graphite producers that demand for higher value graphite produces is holding up and that interest in other parts of Asia remains strong. This may be due in part to China Minmetals Corporation consolidating production in the Heilongjang region potentially tightening supply locally and squeezing out buyers from Korea and Japan.
  • For Syrah, the challenge is to produce consistent and better quality battery grade graphite material economically at lower production levels.
  • The company may also have some 90,000t of inventory to work through indicating that the mine could go to care & maintenance for some time.

Conclusion:  Producing graphite is all about adding value to the product rather than simply offloading large tonnages of material onto Chinese traders and processors. We understand demand remains good from battery anode manufacturers for higher-value product and graphite producers.

*SP Angel act for graphite manufacturer Talga Resources and graphite project company, Walkabout Resources




John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474



Richard Parlons – 0203 470 0472

Abigail Wayne – 0203 470 0534

Rob Rees – 0203 470 0535


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


Metal Bulletin



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