SP Angel . Morning View . Friday 23 04 21
US equities falter on Biden’s ambitious tax plan
Alba Mineral Resources (LON:ALBA) – Phase-1 drilling results show mineralised gold zones at Llechfraith Lode
Gold prices steady near eight-week high as bond yields trend lower
Gold prices fell slightly this morning, although are still on track for a third straight weekly gain on reports of a recovery in the physical gold market.
India’s gold imports from Switzerland surged to the highest level in eight years last month, with Asian buyers continuing to be a key pillar of support in the physical market.
China’s imports from Switzerland were four times higher than a month prior, reaching a seven month high.
India and China imported 82.6 tonnes and 9.3 tonnes from Switzerland respectively.
Treasury yields continued to trend lower this week, sliding over 4% since Monday.
Rising yields have hampered non-yielding bullion so far this year- outcompeting the metal somewhat as a safe haven asset.
Inflation rising as Manheim Index shows Spring leap in price levels
The Manheim Index of used vehicle prices has risen strongly through the first 15 days of April in the US and is now 52.2% yoy (Cox Automotive)
Used vehicle prices tend to rise in recessionary times and will be a huge relief for manufacturers and leasing companies which depend on residual values.
The news is a dramatic reversal from last year when the Manheim index fell 12% for the first 15 days of April last year.
Used light vehicle prices fell in March by around 2.3% to average $40,472 in March 2021 despite used inventory falling to low levels.
Some 3,908,738 vehicles were sold through Q1 with robust retail sales making up for a 28% fall in fleet buying.
EV and plug-in hybrid sales rose by >60% in the US in Q1 accounting for nearly 8% of the total market.
The Midsize Crossover market remains the dominant segment with 30 manufacturers and no single dominant player.
Semiconductor group Alphawave IP seek $4.4bn valuation in London IPO
Canadian Chip developer Alphawave IP has chosen to float in London, with the company developing chip technology that pushes data through data centres and phone networks, the FT reports.
Alphawave intends to raise more than $500m via a listing in London, and set up a research centre in Cambridge.
The company’s chairman opted for London due to the country’s strong heritage in developing chip technology that is then licensed to manufacturers.
Alphawave specialises in developing digital signal processing chip technology that is used to transmit data over wired networks.
Dow Jones Industrials -0.94% at 33,816
Nikkei 225 -0.57% at 29,021
HK Hang Seng +0.79% at 28,982
Shanghai Composite +0.26% at 3,474
US – Biden to roll out sweeping overhaul of US tax system to fund ambitious economic agenda
President Biden intends to roll out a plan to raise taxes on the wealthiest Americans including the largest-ever increase in taxes on investment gains.
The increased taxation is expected to help fund $1 trillion in childcare, universal pre-kindergarten education and paid leave for workers.
The top marginal income tax rate is to increase to 39.6% from 37%.
Capital gains taxes are to nearly double to 39.6% for people earning more than $1m.
Biden’s plan would hit private equity and hedge fund managers by eliminating the preferential tax treatment of their profits – or “carried interest”, which is currently taxed at the lower capital gains level rather than ordinary income.
The S&P 500 index declined 1% on the news, while Bitcoin has fallen over 10%.
UK – April Composite Flash PMI at 60.0 vs 56.4 prior and 58.1 expected
Manufacturing PMI at 60.7 vs 58.9 prior and 59.0 expected
Services PMI at 60.1 vs 56.3 prior and 58.9 expected
Preliminary PMI data is indicative of a flurry of business activity in April as the country lifted some of its Covid-19 restrictions, with the composite PMI reading at its highest level since November 2013.
Business activity is expected to continue to grow strongly in May and June as the virus restrictions are eased further.
France – April Composite Flash PMI at 51.7 vs 50.0 prior and 49.4 expected
Manufacturing PMI at 59.2 vs 59.3 prior and 59.0 expected
Services PMI at 50.4 vs 48.2 prior and 46.7 expected
Germany – April Composite Flash PMI at 56.0 vs 57.3 prior and 57.0 expected
Manufacturing PMI at 66.4 vs 66.6 prior and 65.8 expected
Services PMI at 50.1 vs 51.5 prior and 51.0 expected
French Wine tasters demand vaccine priority as virus interferes with sense of smell
French wine tasters have asked to be at the front of the vaccine queue, with the loss of taste and sense of smell is a primary symptom of the coronavirus.
The Union of Oenologists has written to both Pesident Macron and Prime Minister Jean Castex to ask that wine tasters be made priority for vaccination in order to safeguard livelihoods.
The Head of the union commented: It’s like asking a musician to play without his instrument.”
US$1.2052/eur vs 1.2045/eur yesterday. Yen 107.89/$ vs 107.86/$. SAr 14.289/$ vs 14.240/$. $1.389/gbp vs $1.394/gbp. 0.774/aud vs 0.776/aud. CNY 6.492/$ vs 6.483/$.
Gold US$1,784/oz vs US$1,793/oz yesterday
Gold ETFs 99.1moz vs US$99.2moz yesterday
Platinum US$1,213/oz vs US$1,214/oz yesterday
Palladium US$2,844/oz vs US$2,864/oz yesterday
Silver US$26.08/oz vs US$26.49/oz yesterday
Copper US$ 9,493/t vs US$9,430/t yesterday
Aluminium US$ 2,385/t vs US$2,359/t yesterday
Nickel US$ 16,150/t vs US$16,080/t yesterday
Zinc US$ 2,805/t vs US$2,815/t yesterday
Lead US$ 2,043/t vs US$2,041/t yesterday
Tin US$ 26,940/t vs US$26,900/t yesterday
Oil US$65.9/bbl vs US$65.1/bbl yesterday
Whilst oil prices have ticked up this morning, it has been a difficult week after the Energy Information Administration (EIA) reported an unexpected rise in inventories
Stockpiles increased by 0.6 million barrels for the week ending 16 April, compared to a baseline forecast of a 2.86MMbbl drop
Prior to this, the American Petroleum Institute (API) also released a small build in crude inventory
This marked the first climb seen in four weeks, suggesting that demand is probably not as strong as the market had thought
Viral resurgence in some of the world’s major oil importing countries, such as India and Japan, dented the prospect for energy demand
A worsening pandemic situation in those countries underscored the fragility of a global recovery as uneven distribution and adoption of the Covid-19 vaccines posed a threat to reopening
The OPEC+ will hold a Joint Ministerial Monitoring Committee (JMMC) meeting on 28 April
The group and its allies are expected to maintain the current pace of production unchanged, according to Russia’s Deputy Prime Minister Alexander Novak
Clearly OPEC+ can pump more if a deficit occurs and a balanced view of the current supply and demand relationship may help to stabilise prices.
In the previous OPEC meeting held on 1 April, the group surprised the market by introducing a total 2.25MMbopd production hike from May to July to meet rising global demand
Natural Gas US$2.759/mmbtu vs US$2.703/mmbtu yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$180.1/t vs US$180.4/t
Chinese steel rebar 25mm US$786.3/t vs US$787.4/t
Thermal coal (1st year forward cif ARA) US$74.3/t vs US$74.8/t
Coking coal swap Australia FOB US$146.5/t vs US$146.5/t
Cobalt LME 3m US$49,750/t vs US$49,750/t
NdPr Rare Earth Oxide (China) US$85,487/t vs US$86,067/t
Lithium carbonate 99% (China) US$12,631/t vs US$12,648/t
China Spodumene Li2O 5%min CIF US$630/t vs US$630/t
Ferro-Manganese European Mn78% min US$1,621/t vs US$1,620/t
China Tungsten APT 88.5% FOB US$272/t vs US$272/t
China Graphite Flake -194 FOB US$515/t vs US$515/t
Alba Mineral Resources (LON:ALBA) 0.29p, Mkt cap GBP17.4m – Phase-1 drilling results show mineralised gold zones at Llechfraith Lode
Alba this morning provides assay results from the Company’s Phase 1 drilling programme, where gold mineralisation has been proven in the veins identified with individual values up to 4.25 g/t.
Phase-1 surface drilling results includes:
Hole LL001 – 0.26m of 2.15g/t from 63.2m to 63.46m.
Hole LL001 – 0.27m of 1.7g/t from 63.46m to 63.73m.
Hole LL003 – 0.16m of 3.56g/t from 88.54m to 88.70m.
Hole LL008 – 0.17m of 4.25g/t from 96.92m to 97.09m.
Phase-1 drilling has shown that mineralisation remains open along strike to the west, and as the host stratigraphy is also dipping to the west the deposit could extend to increasing depths to the west.
Alba has commenced its Phase 2 drilling programme, which comprises an 8-10 hole project for up to 2000m.
Mark Austin, Alba’s Chief Operating Officer, commented: “We have always stressed that the primary objective of our drilling programmes is to prove structure and to identify existing lode extensions and new lodes. The drilling at Llechfraith has proved that the main lode in fact comprises two discrete lodes, separated by about 10m. In addition, the drilling has also identified two other vein systems further to the south. The best developed of these new vein systems we are calling the “Canol Vein System” and the uppermost the “Sill Vein System”‘.
“The assay values received are highly significant in that we now have proof that the lodes are mineralised. Indeed, although we are drilling for structure not for grade, nonetheless the grades returned of up to 4.25 g/t are really pleasing, not least when considered against the highly nuggety nature of the lodes.”
Power Metal Resources* (LON:POW) 2.73p, Mkt cap GBP28.6m – Earn-in Complete at Botswana Molopo Farms Complex
Power Metal reports that the Company has now completed the earn-in to a 40% direct project interest in the Kalahari Key Mineral Exploration Molopo Farms Complex Project (MFC).
The MFC Project is targeting prospective magmatic intrusion-hosted massive nickel sulphide and platinum-group element mineralisation in Botswana.
Cash payments against this earn-in commenced in October 2020 and the Company can now confirm that it has fully satisfied the US$500,000 expenditure commitment.
As a result, Power Metal has secured a 40% direct interest in the MFC Project. In addition, the Company holds 18% of the issued share capital of Kalahari Key. Taken together the combined effective economic interest of Power Metal in the MFC Project is 50.8%.
*SP Angel act as Nomad for Power Metal Resources
VOX Markets: 21/04/20: https://www.voxmarkets.co.uk/listings/LON/BMN
IGTV: Improved global economic forecasts from the IMF provides trading opportunities: https://www.youtube.com/watch?v=_GXKPqzuCG0
VW expansion driving battery metals prices: https://youtu.be/7vqSrONBaWw
*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts.
We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate.
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The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
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, Tungsten, Spodumene, Ferro-Manganese, Graphite