SP Angel . Morning View . US GDP and Fed guidance in focus on Wednesday

SP Angel . Morning View . Wednesday 30 10 19

 

US GDP and Fed guidance in focus on Wednesday

CLICK FOR PDF

MiFID II exempt information – see disclaimer below 

Altus Strategies* (ALS LN) – Exploration update on Zager and Daro, Northern Ethiopia

Beowulf Mining* (BEM LN) – Near doubling of graphite resource at Aitolampi

KEFI Minerals* (KEFI LN) – Q3 operational update

Keras Resources* (KRS LN) – Keras to host London investor event with Calidus Resources

Petra Diamonds (PDL LN) – Pit wall at Cullinan mine

 

Anglo American orders 900kW of fuel cell modules from Ballard power to Support Mining Truck Demonstration Project –

• Anglo is ordering the modules for nine of its FCveloCity®-HD 100 kilowatt (kW) fuel cell modules

 

Boliden to invest in expanding its trolley assist haulage

• Boliden will invest $30m at its Aitik copper mine and will look to implement similar technology at its Kevitsa nickel mine in Finland.

 

SP Angel metals price forecasts rankings - APEX FastmarketsMB survey

• 2^nd for Q3 Base Metals forecasts,
• 4^th for Q3 Precious Metals forecasts
• 2^nd on the Raw Materials Leaderboard

 

GrubHub shares fell in NY yesterday on slower than expected growth

• Management blamed their performance on ‘diner promiscuity’ indicating that they have many promiscuous clients!

 

Dow Jones Industrials		-0.07%	at	27,071
Nikkei 225		-0.57%	at	22,843
HK Hang Seng		-0.44%	at	26,668
Shanghai Composite		-0.50%	at	2,939
FTSE 350 Mining		-1.74%	at	17,863
AIM Basic Resources		-0.07%	at	2,170

 

Economics

US – The FOMC is expected to announce a rate cut this afternoon with markets to watch closely the language on the potential for further easing before year end.

• Additionally, Q3 GDP numbers are due to be released before the Fed announcement with expectations for growth to have slowed to 1.6%qoq (annualised), down from 2.0%qoq.
• Weaker growth is forecast to be attributed to the fizzling out economic boost from the Trump tax cuts, trade war related jitters inflicted on the national manufacturing sector.
• On Q3 earnings season, 80% of companies that already reported their numbers outperformed estimates, although, overall expectations are for aggregate annual profit to drop during the third quarter.

 

UK – PM Johnson secured Parliament backing for the snap vote on December 12 in an attempt to break the Brexit deadlock.

• That would mark the third time the nation heads to the polls to choose a new government in four and a half years.
• The vote is likely to be seen as a proxy referendum on Brexit ranging from pro-Brexit Tories to pro-EU Liberal Democrats and Labour somewhere in between.
• The pound is climbed towards its best levels in October surging past 1.29 against the US$ on Tuesday after the Labour backed plans for a December election.

 

Germany – Exports are forecast to contract next year for the first time since the global financial crisis over a decade ago, Germany’s DIHK Chambers of Industry and Commerce said today.

• Exports are estimated to grow 0.3%yoy this year, down from 2.1%yoy recorded in 2018, and are likely to fall 0.5% in 2020.
• “Since the financial crisis of 2008/09, the DIHK has not received such pessimistic replies from the companies,” DIHK President said commenting on their latest business survey among more than 28,000 managers.
• Accordingly, GDP growth rates are forecast to remain weak coming in at 0.4% and 0.5% in 2019 and 2020, respectively.
• In a separate report, unemployment climbed slightly more than forecast in October, although, the jobless rate remained at 5%, near a record low.
• The data follows a survey released this month showing manufacturing remained weak and industry employment dropped at the fastest pace in nearly 10 years.

 

France – GDP growth rate came broadly in line with market estimates and the latest European Commission forecasts amid strong business investment (+3.6%yoy) and resilient private spending (+1.3%yoy).

• Trade was a drag on growth with exports increase slowing to 2.3%yoy, the weakest pace since H1/17, and imports growth rate increasing to 3.4%yoy.
• Boosted by €10bn package of tax cuts and other stimulus measures last year, consumer spending rebounded in Q3 with spending on autos and other durable goods climbing during the quarter.
• 1.3%yoy growth rate recorded in Q3/19 compares well with the rest of the Eurozone and Germany, in particular, that is expected to post the second quarterly negative reading (-0.1%qoq v -0.1%qoq in Q2) suggesting the economy is technically in recession.
• Q3 GDP data for Germany to be released on November 14.
• The European Commission is now estimating the French economy to grow 1.3%yoy  this year and 1.4%yoy in 2020 compared to 1.7%yoy in 2018.
• France GDP (%qoq/yoy): 0.3/1.3 v 0.3/1.4 in Q2/19 and 0.2/1.3 forecast.

 

Spain – Inflation remains weak supporting the Mario Draghi call to restart bond purchases.

• While headline inflation number reflects lower energy prices compared to the previous year, core inflation reading also remains weak hovering around the 1% level.
• EU Harmonised CPI (%mom/yoy): 0.6/0.2 v 0.4/0.2 in September and 0.6/0.1 forecast.

 

NASA working on bringing rocks back from Mars to determine if there ever was any life on Mars

• The project involves three missions and close cooperation between NASA and the European Space Agency.
• Question is what sort of rock might NASA want to bring back.

 

Chile – rioting in Chile continues as government pledges for reform fall short of expectations

 

Currencies

US$1.1113/eur vs 1.1092/eur yesterday.  Yen 108.85/$ vs 108.94/$.  SAr 14.636/$ vs 14.552/$.  $1.288/gbp vs $1.286/gbp.  0.687/aud vs 0.686/aud.  CNY 7.056/$ vs  7.055/$.

 

Commodity News

Gold US$1,491/oz vs US$1,492/oz yesterday

   Gold ETFs 82.1moz vs US$82.1moz yesterday

Platinum US$921/oz vs US$914/oz yesterday

Palladium US$1,788/oz vs US$1,801/oz yesterday

Silver US$17.82/oz vs US$17.77/oz yesterday

           

Base metals:   

Copper US$ 5,910/t vs US$5,895/t yesterday – Hopeful of a rebound in 2020 from a lacklustre 2019 (Roskill)

• Copper prices fell 0.6% on soft end-market demand and weak refined metal consumption in China.
• The continuing US/China trade row hit business confidence, weakens consumer sentiment and slows down global trade that in turn weighs on refined metal demand.
• On preliminary estimates, global refined copper demand was nearly flat in H1/19 with the trend unlikely to change through the remainder of the year.
• In China (>50% of global refined copper demand), declines in auto vehicle sales and power grid investments were main drivers behind weak YTD copper demand numbers.
• Of note is an increase in the scrap metal availability in the market denting demand for primary copper and adding further pressure on prices as Chinese toughened scrap import standards through the year.
• Outlook, demand is likely to pick up next year as it has been very rare for consumption growth to perform poorly over two consecutive years while mining production cutbacks are expected at or below current prices.
• Strategic buying from China may also replenish stocks at “bargain” prices.

Aluminium US$ 1,760/t vs US$1,737/t yesterday

Nickel US$ 16,910/t vs US$16,625/t yesterday - Indonesian nickel exports may resume after investigation (SMM News)

• Yesterday we reported that Indonesian nickel exports have been halted with immediate effect.
• On Tuesday, the minister for mining said nickel exports may resume in a week or two after the investigation into “massive violations” of export rules.
• Authorities are investigating reports of manipulation that led to large-scale exports of high-grade nickel ore.
• Indonesia only allows the exports of ore with less than 1.7% nickel content and only issues export quotas to firms building domestic smelters (Reuters).
• According to a government official, nickel ore exports have jumped to three times higher the normal monthly shipment level since the 2020 export ban was announced.

Stainless steel and new lithium NMC batteries dominate consumption (Roskill)

• Roskill predict that the Indonesian export ban may see Australian projects coming online to close the supply gap.
• While, historically, demand for nickel has been driven almost entirely by stainless steel, new demand from lithium-ion batteries is set to rise on growing EV battery demand.
• Miners are now focussing on the production of on class 1 battery grade nickel.

Zinc US$ 2,543/t vs US$2,540/t yesterday

Lead US$ 2,246/t vs US$2,235/t yesterday

Tin US$ 16,825/t vs US$16,680/t yesterday

           

Energy:           

Oil US$61.7/bbl vs US$61.3/bbl yesterday

Natural Gas US$2.635/mmbtu vs US$2.518/mmbtu yesterday

Uranium US$23.90/lb vs US$24.05/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$83.3/t vs US$84.4/t - India to allow steel firms to divert iron ore from captive mines (Hellenic Shipping News)

• The government will allow domestic steel producers to divert iron ore production from captive mines to any other production facilities.
• The National Institute for Transformation of India Commission said that existing stringent rules governing captive iron-ore mining prevent steel companies from maximising production.
• The changes could be a precursor to more favourable mining licenses where end use industries can own mines and have full freedom to either use the product or sell to the market.
• Metal stocks such as Tata Steel, Jindal Steel and JSW Steel advanced up to 9.5% on the NSE as a result of the announcement (Indian Business Standard).

Chinese steel rebar 25mm US$558.4/t vs US$558.2/t

Thermal coal (1st year forward cif ARA) US$64.7/t vs US$64.4/t - Murray Energy files for bankruptcy (FT)

• The largest privately owned coal miner in the US has filed for bankruptcy protection.
• The company will continue its operations throughout the process, borrowing $350m from a group of lenders.
• Mr Murray has been a supporter of President Trump, and actively lobbied the administration to support the industry such as the repeal of the Clean Power Plan.
• Utilities companies have chosen other sources to generate electricity, and April saw renewable energy generation surpass coal for the first time in the US (electrek).

Coking coal futures Dalian Exchange US$183.7/t vs US$183.7/t

           

Other:  

Graphite* $540/t flake 94% carbon -100 mesh fob China – Battery related demand to gain more market share over the next decade (Roskill)

• Demand for graphite to be driven by both slowly growing traditional markets (refractories, lubricants, steel alloys etc.) as well as rapid growth in lithium-ion batteries’ applications.
• In particular, demand for small and medium sized flakes graphite used in batteries-related applications is expected to post above industry average growth rates over the next decade (ie 16%pa CAGR).
• The anode-related market is set to grow in absolute terms driving demand for both natural and synthetic graphite with demand for synthetic graphite likely to rise faster despite its high cost unless natural graphite producers are able to compete on quality.
• China is increasingly looking for natural graphite feedstock externally including Africa as domestic production costs increase and environmental restrictions cut back on domestic production.
• Although China is subject to ongoing environmental inspections and closures, the nation continues to account for 100% of spherical graphite production and is likely to sustain the dominant market share on lower production costs including less stringent environmental restrictions.
• We feel market dynamics will change with new natural graphite producers like Talga and Beowulf looking to produce value-added graphite products for anode producers.

*SP Angel act as UK broker to Talga Resource and Walkabout Resources. SP Angel acts as Nomad and broker to Beowul.f

Cobalt LME 3m US$36,000/t vs US$36,000/t – positive outlook for the cobalt price, driven by both increased demand and reduced supply (Roskill)

• Roskill predict the cobalt market to double over the next decade due to demand from battery manufacturing.
• Artisanal mining in the DRC pushed the market into oversupply causing prices to pull back from a high of >US$40/lb in April 2018.
• Glencore’s closure of its Mutanda Mine in the DRC caused prices to recover

NdPr Rare Earth Oxide (China) US$40,745/t vs US$41,175/t -  

Rare Earth Elements – Roskill LME week Rare Earth Symposium

• Roskill presented on Rare Earths yesterday at its LME Week event
• Neodymium which when used in NdFeB permanent magnets has the highest power to weight ratio can attract 1,000 times its own weight.
• China’s Northern Rare Earth Group produced >50% of the nation’s total REE output in previous years.
• China also dominates the recycling of rare earths with >80 operational rare earth recycling facilities in China running last year despite environmental reforms.
• These environmental reforms are restricting primary mine supply and processing which is known to pollute groundwater and contaminate the land.
• Growth in EV demand is driving Neodymium market for magnets in their motors with Terbium and Dysprosium used to dope magnets for resistance to higher temperatures and demagnetisation.
• Roskill predict that certain rare earths will experience future supply tightness more than others.

*SP Angel act as Nomad and broker to Mkango Resources

Lithium carbonate 99% (China) US$6,873/t vs US$6,874/t – Demand for lithium still expected to increase five-fold over the next ten years (Roskill)

• Expectation for high lithium demand and a rush to production oversupplied the market this year causing prices to pull back.
• Production operations in China, Australia and Canada and Chile ramped-up due to fears of future supply shortages.
• Oversupply in the market enabled buyers to start specifying better quality lithium concentrates.
• The LME has announced the creation and first meeting of its new LME Lithium Committee made up of participants from across the lithium market.
• The LME has chosen Fastmarkets for lithium price reporting and is working on shaping a globally accepted lithium price to underpin lithium futures contracts.
• We expect the formation of a lithium contract to find popular support in the market.

Ferro Vanadium 80% FOB (China) US$33.5/kg vs US$34.5/kg

Antimony Trioxide 99.5% EU (China) US$5.4/kg vs US$5.4/kg

Tungsten APT European US$225-245/mtu vs US$205-215/mtu

 

Battery News

Solar-battery systems could soar in California (greentechmedia)

• Integrated solar energy storage systems could help Californian residents facing wildfire and grid blackout emergencies in the state.
• California based Enphase says that a quarter of its California solar customers are now choosing to add batteries to their systems.
• The state has been undergoing day-long blackouts under the fire-prevention power outage regime, which increases the appetite for domestic storage systems.

 

Company News

Altus Strategies* (ALS LN)  3.9p, Mkt Cap £6.9m – Exploration update on Zager and Daro, Northern Ethiopia

• The Company update the market on exploration work at Zager and Daro projects located within the Arabian Nubian Shield in Northern Ethiopia.
• Reconnaissance work is focused on a discovery of a VMS-type deposit with team on the ground completing surface mapping and sampling to identify targets for follow up exploration programme.
• At Zager (285km²), eight additional hard rock artisanal gold workings have been discovered up to 10m wide and 15m deep.
• Rock chip sampling of exposed quartz veins returned high grades of gold including 27.1g/t, 7.3g/t and 2.9g/t.
• Additionally, surface samples collected contained base metals’ bearing minerals such galena, chalcopyrite and bornite.
• The team is currently completing a license-wide stream sediment survey that would be followed up by sampling of hard rock workings.
• At Daro (412km²), prospecting reported both oxide and sulphide copper mineralisation mapped discontinuously along the 1.2km potential extension of the 2.8km long Simret prospect.
• The team is currently undertaking detailed geological mapping along the 7.3km long corridor to prioritise targets for the ground geophysical gravity survey planned for Q1/20.
• Rock chip sample results at the Wedi Keshi prospect include 21.6g/t gold.

Conclusion: Surface sampling and the presence of artisanal miners warrant further follow up exploration work at Zager and Daro located in the area prospective for VMS style deposits with a number of mining groups active in the region including Newmont Goldcorp, East African Metals and Sun Peak Metals.

*SP Angel acts as Nomad and Broker to Altus Strategies

 

Beowulf Mining* (BEM LN) 6.25p, Mkt Cap £37m – Near doubling of graphite resource at Aitolampi

(Beowulf owns 100% Kallak iron ore in Sweden, 100% of Aitolampi graphite in Finland and 40% of the Mitrovica and Viti projects in Kosovo)

• Beowulf Mining report an 81% increase in its graphite resource at the Aitolampi graphite project in Finland as estimated by CSA Global PTY Ltd to JORC 2012 standards.
• 17.2mt grading 5.2% TGC for 887,000t of graphite - Indicated and Inferred Mineral Resource Western Zone
• 9.5mt grading 4.1% TGC for 388,000t in the eastern lens of the resource - Indicated and Inferred Mineral Resource remains unchanged
• 26.7mt grading 4.8% TGC for 1,275,000t of contained graphite JORC 2012 - updated global Indicated and Inferred Mineral Resource
• 11.1 Mt at 5.7% TGC for 630,000t of contained graphite augmented global Indicated and Inferred Mineral Resource, reporting above a 5% TGC cut-off.
• The update is based on 23 diamond drill holes for 3,608.92m of which five holes were completed this year for 838.17m into the western higher-grade graphite mineralised lens.
• The team have taken samples from a number of other recently granted Claim Reservation areas Polvela, Tammijärvi, Karhunmäki and Merivaara with samples now sent to SGS, Lakefield in Canada for Scoping Level Metallurgical Testing.
• Test work on the Aitolampi graphite is being done by ProGraphite Gmbh in Germany and at the Battery Materials Lab in Finland.
• Battery tests on the purified micronized and purified spheronised graphite should give some idea of the potential value of the Aitolampi material shortly.
• Drilling into the Western Zone shows a relatively good graphite grade at Aitolampi with the orebody open in all directions and offering significant upside:
  • 102.04m grading 5.07% Total Graphitic Carbon ‘TGC’ - including 46.68m at 6.09% TGC
  • 94.69m at 5.76% TGC - including 11.43m at 7.13% TGC.
  • 96.83m at 5.01% TGC - Including 22.65m at 6.0% TGC.
  • 91.13m at 5.03% TGC - including 42.69m at 6.16% TGC.

Conclusion:  We see the real value of this type of graphite deposit as in its potential for battery-grade spheronisation which has potential for significant premiums and strong demand. While Beowulf is not a leader in this field it has the potential to benefit on the work done by others to feed a number of new planned European battery manufacturing facilities in future years.

*SP Angel acts as nomad and broker to Beowulf Mining

 

KEFI Minerals* (KEFI LN)  0.72p, Mkt Cap £5.9m – Q3 operational update

• At Tulu Kapi (45% owned by KEFI), the gold project is on course for the release of equity funding and start of development works.
• The only outstanding matter at the moment is for the Ethiopian Government to resolve certain internal administrative matters.
• The Company received re-confirmation from its partners and contractors of their respective commitments to proceed once the Government resolves its internal matters.
• The delay means the Company is not in a position to commence development works this month, although, all parties to the project including Ethiopian authorities remain supportive of Tulu Kapi that is to yield significant economic benefits for local community and the nation, in general.
• On timing, the Minister for Mines and Petroleum said that “the Tulu Kapi project remains of the highest priority for the Government at all levels and that there is just one outstanding administrative matter, internal to the Government, which will be resolved shortly, so that the development may commence”.
• The $160m debt funding awaits triggering by TKGM of the balance of its compliance procedures and their associated costs, with full project finance to close after initial development work has been funded with project equity.
• The team reiterates its start of production target for mid-2021.
• Milestones for the remainder of 2019 include completion of the first $11.4m investment tranche, start of community resettlement programme, carrying tenders for construction of off-site infrastructure as well as bulk earthworks and nearing project debt funding completion.
• At Hawiah (owned in a 40/60 JV with ARTAR) in Saudi Arabia, the team launched field work leading up to drilling programme that started in October testing the 5.5km long geophysical anomaly identified under the gossanous ridgeline.
• While assay results are currently pending, initial results confirm the presence of the sulphide mineralisation at a vertical depth of 125m.
• The Company is planning to compete 2,500m of diamond drilling to better understand the distribution and limits of the mineralisation of both near surface oxide gold and massive sulphide copper target at depth.
• Following restructuring of the convertible loan facility in August and September, the Company currently has £0.5m remaining available under the restructured £2.25m facility with additional £1.6m available under the previous loan facility as of 28 October 2019.
• The Company repaid £1.19m of the new loan facility by issuing 156.4m shares with some £0.56m currently remaining owed.
• The team is expecting cash burn rate to be reduced to c.£1m per annum (excl exploration) once Tulu Kapi development works start.

*SP Angel act as Nomad and Broker to KEFI Minerals

 

Keras Resources* (KRS LN)  0.48p, Mkt Cap £12m – Keras to host London investor event with Calidus Resources

(Keras hold an 85% interest in Societé General des Mines which holds the Nayega manganese project license in Togo; 33.71% interest in Calidus)

BUY, Valuation 1.08p

Click for our last full note on Keras

• Keras Resources is to host a joint investor event with the management of Calidus Resources in London on 6^th November.
• The event is to be held at The Vintry, Off Abchurch Yard, Abchurch Lane, London EC4N 5AX.
• Calidus recently reported infill drilling results at the Warrawoona gold project.
• Near surface drill intersections include:
  • 35m @ 2.84 g/t Au from surface in hole 19KLRC218
  • 23m @ 2.55 g/t Au from 15m in hole 19KLRC241
  • 23m @ 2.06 g/t Au from 1m in hole 19KLRC243
  • 13m @ 2.05 g/t Au from 15m in hole 19KLRC244
  • 20m @ 1.97 g/t Au from 25m in hole 19KLRC245
  • 8m @ 1.52 g/ t Au from surface in hole 19KLRC236
• The results support an upgrade to the Measured category of the resource to be included in the Warrawoona DFS extending the project’s life of mine.
• Drilling at the Klondyke open pit of the Warrawoona project is ongoing with two rigs while an additional RC drill rig is engaged at high-priority regional greenfield targets 3km west of Klobdyke.
• Valuation: our valuation on Keras is 1.08p based on the value of our estimated cash flow from the Nageya manganese mine as well as the value of Keras’s shares in Calidus Resources.
• We ran our valuation on a Calidus Resources share price of A$0.035c/s. Calidus shares are currently A$0.026c/s having traded as high as A$0.040c/s and as low as A$0.020c/s this year.
• Keras plan to demerge its entire 723,750,000 shareholding in Calidus and to distribute to eligible shareholders who are on the share register at 6:00pm on 19 November this year.
• The average daily trading volume for Calidus Resources on the ASX is around 5m shares a day over the last 100 days.

*SP Angel act as Nomad and broker to Keras Resources

 

Petra Diamonds (PDL LN)  7.61p, Mkt Cap £65.9m – Pit wall at Cullinan mine

• Petra Diamonds reports the scaling of some 3m tonnes of material from the southwest wall of the old Cullinan open-pit mine which was abandoned over 50 years ago. The incident, which caused no injuries, followed a thunderstorm which appears to have triggered movement along geological structures resulting in material from the pit wall falling into the bottom of the pit.
• As all mining activity at Cullinan is now underground, apart from a precautionary stoppage to inspect the workings and assess the impact of dust from the fall of material being drawn into the mine the company reports that the inspection team “declared the mine safe, with the result that underground mining resumed later on the evening of Monday 28 October. Community members were also engaged to assess the impact”.
• Petra Diamonds confirms that “It is not anticipated that this incident will have a material impact on production, but the Company is following all appropriate measures to properly address safety of the related mining areas.” The nearest community is reported to be in an unaffected area near the south-east corner of the pit and apart from the dust plume affecting the community, monitoring of the pit walls shows “no unusual movement, other than in the south west corner where ongoing scaling is evident. As a result, we do not foresee any risk to the larger community”.

Conclusion: The incident at Cullinan is a reminder of the longer lasting issues after mining has finished. Petra Diamonds appears to have had comprehensive procedures in place to manage both the operational consequences and the community relations issues arising from the legacy mining issues they assumed when they acquired the Cullinan mine in 2007/2008. Petra Diamonds response at Cullinan highlights the positive aspects of this professional approach to risk management which is the industry standard despite the industry’s detractors seeking to highlight the rare but high-profile cases which support the anti-mining case.

 

 

Analysts

John Meyer – 0203 470 0490

Simon Beardsmore – 0203 470 0484

Sergey Raevskiy – 0203 470 0474

 

Sales

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

W1S 2PP

 

*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	Bloomberg
Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt	LME
Oil Brent	ICE
Natural Gas, Uranium, Iron Ore	NYMEX
Thermal Coal	Bloomberg OTC Composite
Coking Coal	DCE
RRE	Steelhome
Lithium Carbonate, Ferro Vanadium, Antimony	Asian Metal
Tungsten	Metal Bulletin

 

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.

This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.

Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.

Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.

SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SPA is registered in England and Wales with company number OC317049.  The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

MiFID II - Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.

A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).

SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%