SP Angel Morning View: Shenzhen exports and imports by private companies rose 72.4% yoy through January & February

Sierra Rutile: Fiscal agreement update – Area 1 operations to be suspended due to tax uncertainty

Sierra Rutile (“SRX”) has been informed by the Government of Sierra Leone (“GoSL”) that the fiscal regime in the Third Amendment Agreement (“TAA”) will no longer apply to its Area 1 operations. However, SRX disputes GoSL’s ability to unilaterally change the agreement, stating the terms cannot be amended without mutual consent. According to SRX, GoSL’s proposed reversion to the previous regime would result in an increased tax burden making Area 1 uneconomic, and as such the Company has given 45 d

SP Angel Morning View: Copper poised to rise as Chinese smelters struggle to source concentrate

Sierra Rutile: Guidance drop as production slowed on lower prices; shares trade on a 41% discount to cash plus NWC

Sierra Rutile Holdings Ltd (“Sierra Rutile”; “SRX”) has released its Q3 results with operations impacted by an ongoing slump in rutile markets, although the Company continues to operate profitably. Rutile production in Q3 was 27kt, 17% below H&Pe, partly on the back of SRX’s decision to reduce production levels to protect pricing and contain absolute costs. Ore excavation rates in Area 1 were lowered by more than would normally have been expected due to wet season impacts, falling 55% YoY to 1Mt

Sierra Rutile: H1 results & model update - inventory build weighing on cash flow, Area 1 extension boosts TP

Sierra Rutile Holdings Ltd (“Sierra Rutile”; “SRX”) released H1 results showing profitability remained intact despite a tough period operationally, as reported in the July trading update. Sales fell 12% vs H1’22 on a 15% fall in shipments, with realised rutile prices broadly flat. Underlying EBITDA (calculated by H&P) was ~US$29m, +1.6% YoY, although a ~US$13.4m inventory build ahead of the Q3 wet season meant H1 operating cash flow was down 80% to US$7m, with a free cash outflow (post capex) of

Sierra Rutile: Q2 results- weaker rutile output drives reduced 2023 guidance

Sierra Rutile Holdings Ltd (“Sierra Rutile”; “SRX”) released its Q2 activities report, with a weaker quarter of production, mainly due to the power disruptions disclosed last month. The Mineral Separation Plant (“MSP”) was offline for most of June, driving rutile production of 25kt, 22% down vs Q1’23. Management has cut 2023 full-year production guidance from 140kt-144kt to 124kt-126kt (H&P prev 142kt). Net unit cost guidance has been increased to US$990/t-US$1,055/t (H&Pe prev $1,024/t). Althou

Sierra Rutile: Sembehun development plan updated to full development approach for a greater debt capacity

Sierra Rutile Holdings Ltd (“Sierra Rutile”; “SRX”) announced it has adopted a full development approach for its proposed Sembehun project, to optimise project value and widen debt funding capacity. This is updated from the Pre-Feasibility Study which outlined a two-phase approach with phase 1 lasting two years. The Definitive Feasibility Study (“DFS”) timeline remains unchanged and is anticipated to be completed by year end, followed by a Final Investment Decision (“FID”) early next year. Along

Sierra Rutile: Q1 results: 234% annualised FCF yield despite weaker rutile output; 2023 guidance unchanged

Sierra Rutile Holdings Ltd (“Sierra Rutile”; “SRX”) released its Q1 operations update on 28th April, revealing a weaker quarter of production due to lower grades and unscheduled mining interruptions. Rutile production was down 13% on Q4’22, to 32kt, implying a catch up will be required in Q2-Q4 to meet unchanged full-year guidance of 140-144kt. However, SRX had previously flagged that output would be H2-weighted as grades are set to improve over the course of the year. Moreover, mining performan

Sierra Rutile: Area 1 extension to bridge any production gap and reduce funding requirements for Sembehun

Sierra Rutile Holdings Ltd (“Sierra Rutile”; “SRX”) has released an update on its mineral resource at Area 1, as well as their FY22 annual report. Ndendemoia and Pejebu, two deposits in Area 1, are currently being drilled with results due mid-year. However, for the time being SRX has released its annual mineral resource update which has effectively replaced 2022’s full year of production. This leaves Area 1 with four years and eight months of mine life remaining, at which point it is expected th

Sierra Rutile Initation: FY22 results: solid cash flow with more to come in FY23 as Area 1 extension & Sembehun take shape

Sierra Rutile Holdings Ltd (“Sierra Rutile”; “SRX”) has announced its maiden set of annual results as a newly demerged entity on the ASX, with free cash flow for the year coming in at a solid US$23.5m, implying a ~34% FCF yield. SRX had pre-reported rutile production of 142kt and a year-end cash balance of US$37.7m, making deviations vs H&Pe on the P&L of negligible importance. That said, costs were slightly higher than expected, leading to modestly lower than expected EBITDA, even after strippi

Sierra Rutile Initation: Established high-grade TiO₂ feedstock producer with undervalued cash flow and robust growth

We initiate coverage of ASX-listed Sierra Rutile Holdings Ltd (“Sierra Rutile”; “SRX”) with a A$0.64 target, implying 220% upside. SRX’s primary asset is a mineral sands operation in Sierra Leone, with multiple mining areas and wet concentrators feeding a central mineral separation plant. Having operated, on and off, since the 1960s, SRX is among the world’s highest-grade sources of rutile, a key raw material in pigments, aerospace and welding alloys. SRX traded on the London Stock Exchange from

SP Angel – Morning View

Avocet Mining (AVM LN) – Gold shipment from Inata | Kodal Minerals* (KOD LN) – Exploration at Bougouni lithium project identifies new areas | Sierra Rutile (SRX LN) SUSPENDED, – Iluka deal reinstated as independent experts confirm integrity of the dams | Tertiary Minerals* (TYM LN) – Exclusive non-binding agreement to acquire Lassedalen

SP Angel – Morning View

Caledonia Mining (CMCL LN) – Gold sales arrangements remain intact. | Gemfields (GEM LN) – Emerald auction rescheduled | Rambler Metals (RMM LN) – FY 2016 production results as production from LFZ builds up

SP Angel – Morning View

Ariana Resources (AAU LN) – Kiziltepe construction expected to complete in mid-December | ASA Resource Group* (ASA LN) – Bindura Nickel reports US$1.2m profit in half year to September | Bushveld Minerals (BMN LN) – Interims show progress toward Vanadium production acquisition | DiamondCorp (DCP LN) Suspended – 310m level now clear of flood water and longhole rig being moved for refurbishment | Metals Exploration* (MTL LN) – First gold sale as Runruno mine ramps up amid debt rescheduling talks

SP Angel – Morning View

Amur Minerals* (AMC LN) – Agreement with the Far East Investment and Export Agency | Asiamet Resources (ARS LN) – Metallurgical test-work from BKM | DiamondCorp (DCP LN) Suspended – Business rescue practitioner appointed | Sierra Rutile (SRX LN) – Iluka merger cleared

Alien Metals - Hancock Project, Mining Lease Granted

Alien today reports intraday that the Western Australian Government has granted a mining licence for the Hancock iron ore project for a 21-year term. The granting of the mining licence is the latest milestone delivered by Alien as it advances the project towards development and production.

SP Angel Morning View: Copper prices hit $9,700/t as China smelts concentrates for zero charge Tc/Rc

SP Angel Morning View: Gold resilient as US interest rates climb on long-term inflation concerns

NextSource Materials - Initiation

NextSource is uniquely positioned to build a leading vertically integrated position, ex China, in the supply of Lithium-ion battery anode material which is essential for the Energy Transition. The company is commissioning phase 1 of its world-class Molo graphite mine in Madagascar and is in the final permitting process for its first Battery Anode Facility (BAF) to be located in Mauritius. The company is backed by Vision Blue, established by Sir Mick Davis, former CEO of Xstrata. On our calculat

I3 Energy (I3E LN) - Canada royalty assets sale

I3 has announced the sale of the majority of its royalty interests in Canada, for US$24.8m cash. This allows the company to fully repay amounts drawn on its debt facility and create a working capital surplus, giving I3 significant additional funding flexibility going forward

Jubilee Metals - Operational Update Q3 FY2024

Jubilee today reports its Q3 and third quarter operational results from its expanding operations in Zambia (copper) and South Africa (chrome and PGM). South Africa is on a growth trajectory with record chrome production of 409kt in the quarter (Q2 FY2024 381kt) and a monthly record in March of 145kt and production YTD of 1.13Mt (0.94Mt). Jubilee is well underway to its annual target capacity of 2,1Mt/yr especially with the new 300kt/yr chrome plant at Thutse expected to be operational in August

DEC FY23 Results Update

DEC reported FY23 results which were in line with expectations and announced the acquisition of joint venture assets from Oaktree along with an updated capital allocation framework.

LIBERUM: New Energy Nuggets: Hydrogen - the future is green

SP Angel Morning View: Global Li-ion battery demand reaches all-time in Q1 2024

Zeus Top Picks for 2024 - 2023 review and outlook for 2024

On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div

Gulf Marine Services (GMS LN) - Contract award

GMS has announced a new contract award, at improved day rates, adding to order book and overall revenue momentum.

Challenger Energy (CEG LN) - £1.5m strategic investment in Challenger

Challenger has announced a £1.5m investment in the company from investor Charlestown Energy. This now allows Challenger to be fully funded for the foreseeable future as it works towards closure of its significant Uruguay farm out to Chevron, and the US$12.5m cash payment to be received once this is achieved.

Tethys Oil AB (SSE: TETY): Increasing further the size of the prize

• The South Lahan area on Block 58 is estimated to hold 55-523 mmbl prospective resources (P90-P10 case) with a mean case of 251.8 mmbbl prospective resources across six prospects in the Ara Carbonate. • Combined with the previously disclosed prospective resources of the Fahd area in the north-eastern part of Block 58, Tethys Oil’s unrisked recoverable prospective resources on the block are estimated to be 435.9 mmbbl (Pmean). • The geological chance of success ranges from 6% to 11% for the six

Is there a “big-picture” change in the cards?

We note that this morning’s announcement by Aminex for a significant potential resource increase in the Ruvuma basin. We believe that the recent pullback in the share price (likely due to delays in the first gas production schedule) provide a good risk/reward opportunity, especially given the future potential in next 12-24 months, highlighted by today’s announcement.

Morning Note – 4 April 2024