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Today's Market View - Greatland Gold, Scotgold Resources, Talga Resources and more...

SP Angel . Morning View . Thursday 24 10 19 Eurozone in stagnation and in need of monetary/fiscal stimulus MiFID II exempt information - see disclaimer below

Greatland Gold (LON:GGP) - Drilling results from the Havieron project Scotgold Resources* (LON:SGZ) BUY - Target Price 88p (up from 84p) - Grampian permit area update Talga Resources* (ASX:TLG) - Graphene joint development agreement TNG Limited (ASX:TNG) - Proposed London listing Vast Resources* (LON:VAST) - $15m funding agreed

Four in five EU coal plants are unprofitable (FT)

According to a report by the Carbon Tracker Initiative, Europe's coal-fired power plans have potential losses of US$7.3bn this year. Coal is struggling to compete with lower cost renewable energy and cheaper natural gas prices (Reuters). Rising prices of EU carbon credits has also had a negative impact on the industry, as credits have tripled in cost since 2017 to more than [euro]25 per tonne of CO2. Coal generation has already fallen 39% this year, and 45% of capacity is scheduled to shut down by 2030. Despite the EU's policy of phasing out coal for green energy alternatives, countries such as Germany and Poland still rely heavily on coal for energy production.

In January, a commission appointed by the German government deemed that the government's plan to phase out coal by 2038 was too ambitious. According to the commission, phasing out coal by 2038 would have "far-reaching consequences for the German energy sector" (MarketWatch.com).

Dow Jones Industrials +0.17% at 26,834 Nikkei 225 +0.55% at 22,751 HK Hang Seng +0.87% at 26,798 Shanghai Composite -0.02% at 2,941 FTSE 350 Mining +0.71% at17,802 AIM Basic Resources +0.27% at 2,137

Economics Japan - The economy contracted in October after the sales tax hike that came into affect during the month.

Composite PMI: 49.8 v 51.5 in September.

Eurozone - Economic outlook remains dim with business activity tinkering on the brink of a contraction, according to the latest PMI data.

Manufacturing continues to struggle with the industrial PMI staying flat at 45.7 in October (45.7 in September and 46.0 forecast). Services is the industry that helps the economy to avoid a recession with the PMI index at 51.8 (51.6 in September and 51.9 forecast). Future expectations are at the lowest level since 2013 and jobs growth hit the weakest since 2014. Region wise, improved performance in France (Composite PMI 52.6 v 50.8 in Sep and 51.0 forecast) along with a mild easing in the rate of decline in Germany (48.6 v 48.5 in Sep and 48.8 forecast) came on the back of a slowdown towards stagnation in the rest of the single currency area. "The flash PMI (pointed) to a quarterly GDP growth rate of just under 0.1%... piling pressure on Christine Lagarde to drive new solutions to the eurozone's renewed malaise" Markit wrote.

ECB - The central bank is due to hold a press conference later today with no changes to the policy expected to be announced.

This will mark the last meeting of Draghi as head of the ECB before he is replaced by Lagarde.

UK - EU states delayed a decision on whether to grant the UK a three-month Brexit extension.

Boris Johnson said he will call an early election by Christmas if the Brexit is delayed. The pound is little changed against the [euro] this morning at 1.16.

Currencies US$1.1130/eur vs 1.1120/eur yesterday.

Yen 108.69/$ vs 108.37/$.

SAr 14.624/$ vs 14.681/$.

$1.289/gbp vs $1.285/gbp.

0.683/aud vs 0.684/aud.

CNY 7.071/$ vs

7.075/$.

Commodity News Gold US$1,490/oz vs US$1,495/oz yesterday Gold ETFs 82.0moz vs US$82.0moz yesterday Platinum US$920/oz vs US$895/oz yesterday Palladium US$1,743/oz vs US$1,752/oz yesterday Silver US$17.51/oz vs US$17.60/oz yesterday

Base metals:

Copper US$ 5,895/t vs US$5,813/t yesterday Aluminium US$ 1,727/t vs US$1,719/t yesterday Nickel US$ 16,790/t vs US$16,305/t yesterday - Nickel rises on Wednesday due to supply concerns and falling inventories (Reuters)

The most traded contract on the Shanghai Futures Exchange rose as much as 4.8% to US$18,669t. Benchmark nickel on the LME climbed 2.5%. An accident at

Nornickel's mine in Siberia saw three people killed, triggering supply concerns. These concerns were short-lived, as the mine is now functioning as usual (mining-technology).

Zinc US$ 2,496/t vs US$2,483/t yesterday Lead US$ 2,218/t vs US$2,218/t yesterday Tin US$ 16,650/t vs US$16,845/t yesterday

Energy:

Oil US$60.7/bbl vs US$59.5/bbl yesterday Natural Gas US$2.280/mmbtu vs US$2.263/mmbtu yesterday Uranium US$24.40/lb vs US$24.60/lb yesterday

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$84.1/t vs US$84.3/t Chinese steel rebar 25mm US$555.2/t vs US$555.2/t Thermal coal (1st year forward cif ARA) US$66.3/t vs US$66.6/t Coking coal futures Dalian Exchange US$183.3/t vs US$183.2/t

Other:

Cobalt LME 3m US$36,000/t vs US$36,000/t NdPr Rare Earth Oxide (China) US$42,780/t vs US$43,607/t - China in talks to gain rare earth mining rights in North Korea (Reuters)

North Korea plans to grant China access to a rare earth mine in return for investment in solar energy. North Korea has ongoing power shortage problems and wants a 2.5m kilowatt hour per day solar plant, estimated to cost around $2.5bn. Whilst China is the world's dominant producer of rare earths, North Korea is thought to have significant untapped resources. Relations between the two countries are at their best, and there have been a series of events this month celebrating 70 years of diplomatic relations (Radio Free Asia). However, Chinese officials are cautious and some believe that investing in North Korea is not safe.

Lithium carbonate 99% (China) US$7,000/t vs US$6,997/t - China set to continue dominating the lithium-ion revolution (Energy and Capital)

China is moving significantly faster than the US in both the battery metal space and the uptake of electric vehicles. 1.2m EVs were bought in China last year, compared to 358,000 in the US according to the Edison Electric Institute. Last year, China's Tianqi Lithium became the second-largest shareholder in SQM in a deal worth $4bn, giving China control of over half of the world lithium production. Lithium prices have been falling since 2018, however many believe that future demand due to EV uptake and uncertain future supply will lead to significantly improved future prices. An outlook report by Roskill stresses the importance of ramping up production at existing operations, and new operations is required to meet the forecasted demand growth in the lithium sector.

Ferro Vanadium 80% FOB (China) US$36.0/kg vs US$36.3/kg Antimony Trioxide 99.5% EU (China) US$5.4/kg vs US$5.3/kg Tungsten APT European US$225-245/mtu vs US$225-245/mtu

Company News Greatland Gold (LON:GGP) 1.835p, Mkt cap [pounds]65.6m - Drilling results from the Havieron project

Greatland Gold highlights the publication, by Newcrest Mining in its Quarterly Exploration Reeport released to the ASX today, of additional results from Greatland Gold's Havieron prospect in the Paterson District of Western Australia. We note that Newcrest's Quarterly (available at www.asx.com.au/asxpdf/20191024/pdf) leads with the Havieron project. Newcrest Mining, which has met its minimum exploration expenditure commitment of US5$m as part of a staged US65$m earn in to acquire a 75% interest in the project, ahead of schedule has six drilling rigs on site and is now moving into the second phase of its exploration programme. Greatland Gold explains that the Newcrest drilling has now defined "up to four sub vertical zones of higher-grade mineralisation within a larger mineralised envelope ... [and that the results] ... further extend the mineralised envelope to the north and at depth, with mineralisation now observed over 950m of vertical extent". Among the recent results from holes HAD015-HAD018 announced today, Greatland Gold highlights: Step out drilling approximately 150m to the north of the previously reported holes HAD013 and 014 has intersected 28m at an average grade of 0.96g/t gold and 0.07% copper from a depth of 979m in hole HAD 015 which intersected a second zone averaging 0.38g/t gold and 0.51% copper from a depth of 1186m; and The deepest mineralisation intersected to date on the project below the previously reported results of holes HAD 013 and 014 with 124m averaging 1.6g/t gold and 0.35% copper (including a higher grade section of 15m averaging 5.7g/t gold and 1.2% copper from 880.2m depth) from a depth of 780m in hole HAD017. The same hole also intersected 49.6m averaging 2.9g/t gold and 0.12% copper from 1,011.4m as well as 45m averaging 7.1g/t gold and 0.08% copper from 1,077m and 70m averaging 0.78g/t gold and 0.12% copper from 1,452m; and Step-out drilling 100m to the north of hole HAD013/014 which intersected 75.7m averaging 1.9g/t gold and 0.5% copper (including 16.2m of 6.7g/t gold and 0.56% copper from 632.8m) from 597.3m depth as well as 96.4m averaging 4.5g/t gold and 0.14% copper (including 15.4m of 20g/t gold and 0.32% copper from 928.5m) and 175m averaging 0.43g/t gold and 0.13% copper (including 12.9m of 1g/t gold and 0.41% copper from 1,193.1m). Hole HAD015 "Passed over the top of the mineralised envelope and did not intersect significant mineralisation". Newcrest explains that "The Havieron Project ... is centred on a deep magnetic anomaly located 45km east of [Newcrest's] Telfer [mine] in the Paterson Province. The target is overlain by more than 400m of post mineral cover. ... Drilling has defined up to 4 sub vertical zones of high grade mineralisation in a larger envelope of variable mineralised crackle breccia fractured host rock". The proximity of Havieron to one of its existing mines is clearly attractive to Newcrest which is also one of the world's important practitioners of the capital intensive but low-cost underground block-caving technology which may ultimately prove applicable to a large, deep, body of mineralisation which seems to be emerging at Havieron. Newcrest also holds approximately 14.8% of Solgold* which is fast-tracking the feasibility study for the development, using block caving, of the

2bn tonnes Alpala copper/gold deposit in Ecuador.

Conclusion: The intersection of wide zones of sub-vertical mineralisation at depth is a challenging exploration target and the definition of the full extent of what is shaping up to be a sizeable discovery is likely to take some time and require the resources, both technical and financial, of a major mining company of the standing of Newcrest. We look forward to further news as the exploration drilling moves into Phase 2. *SP Angel act as Financial Advisor and broker to Solgold

Scotgold Resources* (LON:SGZ) 73p, Mkt Cap [pounds]36m - Grampian permit area update BUY - Target Price 88p (up from 84p) The Company entered into 13 new "Option Agreements" with Crown Estate Scotland replacing the previous five existing agreements signed in 2015. Agreements provide Scotgold with the right to a Mining Lease in case a development project is identified as a result of exploration. Under the current arrangement the Company secured 13 new Option Agreements as of November 2018 covering up to 250km2 each and valid for a new 6 year period. Conclusion: The team secures the permit area for future exploration works in a new agreement within the highly prospective Grampian Terrane that is a continuation of the Dalradian gold province of Northern Ireland hosting the Curraghinalt and Cavanacaw gold deposits. We have updated our target price to reflect new gold price forecasts (2019: $1,545/oz; 2020+: $1,500/oz) reiterating our Buy recommendation. (Jun year end)

Source: SP Angel, Company *SP Angel acts as Nomad and Broker to Scotgold Resources

Talga Resources* (ASX:TLG) A$0.54, Mkt Cap A$12m - Graphene joint development agreement Valuation: A$1.80

Talga Resources reports that it has agreed with the Swedish based multinational packaging company, BillerudKorsnEns, to work together on the development, and commercialisation of packaging products using Talga's graphene product, Talphene. The agreement follows "successful testwork completed under the Letter of Intent ... signed by the parties in August last year". The company comments that the use of Talphene "is designed to enable a range of performance and eco-benefits such as natural fibre replacement of plastic packaging, amongst others." Talga's Managing Director, Mark Thompson, commented that "We are excited to be advancing our relationship with a global industry leader such as BillerudKorsnEns to enable greener and innovative packaging solutions with our graphene technology." Speaking on behalf of BillerudKorsnEns, its Executive VP, Innovation, Dr. Magnus WikstrE[micro]m, said that "Talga's advanced solutions fit very well with BillerudKorsnEns' vision of challenging conventional packaging for a sustainable future. We are happy for this collaboration and look forward to jointly explore new possibilities together with the Talga team".

Conclusion: Talga's collaboration with BillerudKorsnEns extends the potential uses of its graphene product, Talphene *SP Angel acts as UK broker to Talga Resources. An SP Angel analyst has visited the leading battery R&D institution WMG partnering with Talga.

TNG Limited (ASX:TNG) A$0.81/s, Mkt Cap A$91m - Proposed London listing

TNG Limited have announced their intention today to seek a dual listing on the London Stock Exchange. The company reports it will roadshow in London in Q1 2020 after which is may or may not raise funds for its Mount Peake Vanadium-Titanium-Iron project. Mount Peake is an interesting project which proposed to produce Vanadium Pentoxide, Titanium Pigment and high-grade Iron Oxide The project uses their proprietary TIVAN processing technology which invites a few questions so we started hunting round the publicly available info to see what we could find: So we thought we would start with: Testwork: How much material has been tested in the TiVAN process? Leach results were reported in July 2015 but with no figures on the quantity of material tested. Similarly in May 2012 results were reported but with no quantities attached.

We note the company claims an extensive program of metallurgical testwork started in 2009. Inspection of the company's June presentation does not give any indication of how much material has been tested either leaving us wondering how well tested the TiVAN process is and if enough work has been done to secure the A$853m of pre-production capital funding needed to get this project going? Pricing for valuation: While the vanadium grade is low at 0.28% V2O5 planned production of up to 11,000tpa representing some 6.9% of global production is significant. TNGs price assumption of US$25,400/t for V2O5 looks conservative. TiO2 +Tttanium dioxide' pigment production is more interesting with a price assumption of US$3,600/t in their modelling. This price is for a top speciality grade of pigment indicating sophisticated post treatment which would be considered unusual for a new player to achieve. TNG are looking to produce 150,000tpa of TiO2 pigment representing 2.2% of global demand. The high-grade magnetite could fetch US$102/t if the grade is high enough. How do they propose to fund the A$853m pre-production capital and what product prices are required to fund the Stage 2 capital of A$969m which is reported to be funded form cashflow).

Conclusion:

While we generally support the development of new technology in the mining industry we are wary of processes that have not been adequately tested. Scaling up novel plants is often best done in stages with a decent size pilot plant often required to de-risk a project before financing. We are therefore wary of any proposal to go directly to a large scale plant without seeing evidence of the scale of the last pilot plant. Lets hope the company can justify the risk of the process, their TiO2 price assumption and plan for full financing?

Vast Resources* (LON:VAST) 0.34p, Mkt Cap [pounds]36m - $15m funding agreed

The Company signed a binding conditional Bond Issue Deed for $15m (gross) in secured convertible bonds to be issued to Atlas Capital Markets, a UK based fund. The team expects the funding to reach production at the Baita Plai Polymetallic Mine in Romania and at the Chiadzwa Community Diamond concession in Zimbabwe. Terms of the convertible loan facility include: Bonds to issued at 90% of par value providing $13.5m in net proceeds in four tranches ($7.1m, $4.5m, $2.1m and $1.4m). 5% coupon rate per annum and two years maturity from the date of each issuance. Unless principal repayments and accrued interest are not settled in cash, bonds will be converted at their par value at 0.24p or 90% of the VWAP over prior 20 trading days (although, Atlas is restricted to the exercise of up to a maximum of 10% of nominal value of the Bonds outstanding at the end of the non-conversion period each month). The facility can be repaid in cash with no conversion allowing the Company to replace the convertible with a different source of funding with the Swiss Bank or others. Non-conversion period covers six months from the First Issuance Date and 12 calendar months from the Second Issuance Date (the latter being at discretion of Atlas). If Atlas elects (the fund has already suggested the Company it intends to exercise its election right) to exercise the non-conversion period of 12 months in respect of Second, Third and Fourth tranches (ie +Zimbabwe Bonds'), the repayable amount of Zimbabwe Bonds will be repayable at any time before the anniversary of the Second Issuance Date at a price of 200% of the principal amount (~$18.8m, being double the $9.4m par value). If the amount including the premium is not repaid during the period, Atlas can exercise the conversion right in respect of the Zimbabwe Bonds. In the event Atlas decides to exercise non-conversion period, the Company has an option to settle the premium repayment amount from cashflows projected to be generated from the Diamond Concession limiting potential dilution. The bonds will be senior secured obligations covered by interest over Baita Plai and the shares of the Company's subsidiary holding the Diamond Concession. The lender will also receive $3.75m worth of warrants at a fixed price of 0.26p issued on each Issuance Date pro rate to each bond issuance (rights to exercise the warrant will expire on the third anniversary of each relevant Issuance Date). The facility is subject to certain conditions including shareholder approval, execution of the agreement with Mercuria (the Company will repay $1m of the $4m Tranche A loan), due diligence relative to each tranche, over time completion of formalities on the Diamond Concession following grant of mining license, and thereafter specific practical milestones on the development of the Diamond Concession up to cold commissioning of the plant.

Conclusion: The refinancing package is expected to provide development capital for the Company to bring Baita Plai and alluvial diamonds' operations in Zimbabwe in production. The Company has also secured the option to prepay the facility should the team source cheaper and longer term funding once the high grade Baita Plai polymetallic mine starts production and commences to deliver cash flows that can be leveraged off. *SP Angel acts as Broker to Vast Resources

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

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Date:Oct 25, 2019
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