Kitco NEWS Roundtable: Recent Episodes
Kitco NEWS
Join Kitco Kitco correspondent Paul Harris and mining audiences manager Michael McCrae who highlight the biggest news in precious metals and mining.
This week China's government pumped more liquidity into financial markets and cutting interest rates to try to pull its economy out of a deflationary spiral and back toward its growth target.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable.
The Chinese stimulus was good for the metals with copper, gold and silver reporting gains.
In mining news Fortescue announces plans to buy a fleet of 100 electrical trucks.
Gold prices are ending the week at another record high.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable.
The Federal Reserve's decision to embark on its first interest rate cut since 2020 has sent ripples through the financial markets. In a bold move, the central bank slashed rates by 50 basis points, bringing the Fed funds rate to a range of 4.75% to 5%. This aggressive cut marks the beginning of what the Fed calls "interest rate normalization," with the ultimate goal of achieving a benchmark rate between 3% and 3.5% by 2025.
In mining news, Reuters reported that Australia’s Titan Minerals on Wednesday announced plans to sell up to 80% stake in its Linderos copper project in Ecuador to a unit of billionaire Gina Rinehart’s Hancock Prospecting for up to $120 million.
Gina Rinehart has been ranked as one of Australia's richest individuals. She is executive chair of Hancock Prospecting. Her wealth reached around A$29 billion in 2012
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Kitco Roundtable is brought to you by Revival Gold. Revival Gold is one of the largest, pure gold, mine developers in the United States. The Company is advancing engineering and economic studies on the Mercur Gold Project in Utah and mine permitting preparations and ongoing exploration at the Beartrack-Arnett Gold Project located in Idaho.
Revival Gold is listed on the TSX Venture Exchange under the ticker symbol “RVG” and trades on the OTCQX Market under the ticker symbol “RVLGF”. The Company is headquartered in Toronto, Canada, with its exploration and development office located in Salmon, Idaho.
In an historic week for the precious metals market, gold futures have shattered records, breaching the $2600 per troy ounce threshold for the first time.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable.
Market are pivoting their attention to next week's Federal Open Market Committee (FOMC) meeting. This gathering is poised to be one of the year's most consequential, with widespread anticipation of the first interest rate cut since 2020. The consensus among analysts, economists, and market observers is that a rate reduction is all but certain. markets are currently pricing in a 73% chance of a 25 bps cut and a 27% chance of a 50 bps cut, according to CME FedWatch.
Early this week AngloGold Ashanti announced it is acquiring Egypt-focused Centamin for $2.5 billion in cash and stock. Anglogold dropped on the news, but recovered by the end of the week.
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Digging Deep is brought to you by Revival Gold. Revival Gold is one of the largest, pure gold, mine developers in the United States. The Company is advancing engineering and economic studies on the Mercur Gold Project in Utah and mine permitting preparations and ongoing exploration at the Beartrack-Arnett Gold Project located in Idaho.
Revival Gold is listed on the TSX Venture Exchange under the ticker symbol “RVG” and trades on the OTCQX Market under the ticker symbol “RVLGF”. The Company is headquartered in Toronto, Canada, with its exploration and development office located in Salmon, Idaho.
Soft labor report supports case for rate cut, but how big will be the cut? And First Majestic Silver announces plans to acquire Gatos Silver for $970 million in an all-share deal.
On Friday mining audiences manager Michael McCrae recorded Kitco Roundtable.
Gold mostly traded sideways this week ending at the 2497 level. Silver ended the week at 27.80.
On Friday, U.S. nonfarm payrolls rose by 142,000 last month, according to the Bureau of Labor Statistics. This figure fell short of the consensus estimate of 164,000.
First Majestic Silver (NYSE:AG) announced this week that it entered into a definitive merger agreement with Gatos Silver whereby First Majestic will acquire all of the issued and outstanding common shares of Gatos. The all share deal is valued at $970 million.
First Majestic said the combined companies will consolidate three world-class, producing silver mining districts in Mexico. The combined annual production of the new entity will be 30-32 million ounces of silver-equivalent, including 15-16 million ounces of silver at all-in sustaining costs of $18.00-$20.00 per silver-equivalent ounce.
Markets are not loving the deal. First Majestic closed down 16% for the week.
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Kitco Roundtable is brought to you by Revival Gold. Revival Gold is one of the largest, pure gold, mine developers in the United States. The Company is advancing engineering and economic studies on the Mercur Gold Project in Utah and mine permitting preparations and ongoing exploration at the Beartrack-Arnett Gold Project located in Idaho.
Revival Gold is listed on the TSX Venture Exchange under the ticker symbol “RVG” and trades on the OTCQX Market under the ticker symbol “RVLGF”. The Company is headquartered in Toronto, Canada, with its exploration and development office located in Salmon, Idaho.
Three pieces of economic news came out this week: housing, GDP and jobless claims.
On Thursday, mining audiences manager Michael McCrae hosted Kitco Roundtable.
Starting the strong news, The U.S. economy continues to defy the odds, as the nation’s Gross Domestic Product (GDP) experienced solid growth in the second quarter. However, despite this positive economic data, gold prices remain largely unaffected, with the market continuing to consolidate near record levels.
On Thursday, the Bureau of Economic Analysis reported that the preliminary reading of second-quarter GDP showed the economy grew by 3.0% between April and June, up from the initial estimate of 2.8%. This represents an increase from the 1.4% growth reported in the first quarter.
Housing data was less strong.
The U.S. housing sector can’t find any consistent momentum as few Americans are looking to enter the housing market even as the Federal Reserve prepares to lower interest rates.
The U.S. pending home sales index dropped 5.5% in July, the NAR announced Thursday, more than unwinding June’s 4.8% increase. With a reading of 70.2, the index has dropped to its lowest level since the NAR first produced it back in 2001.
And lastly, Americans filing new claims for unemployment benefits last week was lower than forecasted.
Initial claims for state unemployment benefits fell to a seasonally adjusted 231,000 for the week ending August 24, the Labor Department announced on Thursday. The number was lower than expectations.
Ganfeng Lithium reported a H1 2024 loss of ~$107M and said it would be delaying spending on projects.
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Kitco Roundtable is brought to you by Revival Gold. Revival Gold is one of the largest, pure gold, mine developers in the United States. The Company is advancing engineering and economic studies on the Mercur Gold Project in Utah and mine permitting preparations and ongoing exploration at the Beartrack-Arnett Gold Project located in Idaho.
Revival Gold is listed on the TSX Venture Exchange under the ticker symbol “RVG” and trades on the OTCQX Market under the ticker symbol “RVLGF”. The Company is headquartered in Toronto, Canada, with its exploration and development office located in Salmon, Idaho.
Gold finished the week well above $2,500 level.
On Friday mining audiences manager Michael McCrae recorded Kitco Roundtable sponsored by Revival Gold.
The precious metals were up as Federal Reserve Chair Jerome Powell signals that the central bank is ready to start easing interest rates.
In his much-anticipated speech at the Jackson Hole Central Bank Symposium, Powell said that the upside risk to inflation has diminished and risks to the labor market have grown.
Lucara Diamond recovered 'one of the largest rough diamonds ever unearthed'. News of the find made headlines in major news publications such as New York Times and Bloomberg.
Lucara traded up 50% for the week.
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Kitco Roundtable is brought to you by Revival Gold. Revival Gold is one of the largest, pure gold, mine developers in the United States. The Company is advancing engineering and economic studies on the Mercur Gold Project in Utah and mine permitting preparations and ongoing exploration at the Beartrack-Arnett Gold Project located in Idaho.
Revival Gold is listed on the TSX Venture Exchange under the ticker symbol “RVG” and trades on the OTCQX Market under the ticker symbol “RVLGF”. The Company is headquartered in Toronto, Canada, with its exploration and development office located in Salmon, Idaho.
Gold enjoyed one of its best five-day stretches of the year this week, and ended with a bang, rocketing to fresh all-time highs in both the spot and futures markets.
On Friday mining audiences manager recorded Kitco Roundtable sponsored by Revival Gold
Gold broke definitively through $2,500 to end the week at $2,508. Silver was up, too, ending the week at $29 ounce.
The week started off with M&A. Osisko Mining (TSX:OSK) will be acquired by Gold Fields for $1.57 billion (C$2.16 billion) in an all-cash transaction.
Early this week Barrick Gold filed its Q2. Analysts had been following the second quarter results of all the gold miners to see how strongly the companies might perform off record high prices for the metal. Net earnings at Barrick were up 25% and the attributable EBITDA margin was up 17% quarter on quarter to 48%. Barrick traded up on the news.
Kitco News - Markets had a gut-wrenching Monday when the Nikkei plunged 12% which set off a global stock rout, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable sponsored by Revival Gold.
The Nikkei news fed the narrative that the Fed may not be able to engineer a soft landing, and a recession could be in the cards. The soft labor market report at the start of the month added to the narrative.
Copper had a tough go of it, reflecting general concerns about the economy. The metal dropped through $4 a pound this week and ended at $3.98.
Lithium woes continue. Reuters reported this week that spot prices for spodumene in top consumer China are hovering around $940 a metric ton, the lowest in almost three years, and Goldman Sachs expects spodumene prices to average $800 over the next year. Reuters reported that Arcadium is reassessing its Mount Cattlin operations in Western Australia given high costs and falling prices of raw material spodumene.
Sprott, which filed a report on lithium this week, sees the current low price of lithium as unsustainable, as it has led to project curtailments and driven some miners to reduce capital expenditures and investment in future supply. Sprott believes that lithium prices have bottomed and that higher prices for the metal may be necessary to incentivize the required future production to meet demand forecasts.
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Digging Deep is brought to you by Revival Gold. Revival Gold is one of the largest, pure gold, mine developers in the United States. The Company is advancing engineering and economic studies on the Mercur Gold Project in Utah and mine permitting preparations and ongoing exploration at the Beartrack-Arnett Gold Project located in Idaho.
Revival Gold is listed on the TSX Venture Exchange under the ticker symbol “RVG” and trades on the OTCQX Market under the ticker symbol “RVLGF”. The Company is headquartered in Toronto, Canada, with its exploration and development office located in Salmon, Idaho.
Markets and metals were walloped by a late week sell-off, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
Earlier in the week Federal Reserve Chair Jerome Powell said in a press conference that a case could be made for a cut "as soon as the next meeting.” The central bank’s dovish stance helped to propel gold prices to a new all-time high of $2,500 an ounce mid week.
But the market was spooked about concerns that the Fed had been keeping interest rates to high for too long. Concerns were punctuated by the jobs report on Friday. According to the Bureau of Labor Statistics, the U.S. economy created only 114,000 jobs last month. The data missed expectations, as economists were looking for job gains of around 176,000. The S&P 500 dropped nearly 4%, with most of the selling coming on Thursday and Friday.
In mining news there was a major mining deal announced at the start of the week. Filo (TSX: FIL) announced today that it agreed to be acquired by BHP and Lundin Mining for $3.2 billion.
BHP and Lundin Mining will form a Canadian joint venture into which the Filo del Sol copper-gold-silver project and the Josemaria copper-gold project.
Copper futures dropped 3% during the week ending the week at $4.11.
On Sunday mining audiences manager recorded Kitco Roundtable.
Bloomberg noted that the metal was at its lowest level since April, adding that pessimism about China's prospects, and a heavy selloff in global technology stocks hurt the metal. A big AI buildout, which would require lots of copper for the data centers, became less certain.
On Friday Seabridge Gold (TSX: SEA) announced that it had received its "substantially started" designation from the BC Government for its 100% owned KSM Project. Seabridge says that the KSM project is the world's largest undeveloped gold project as measured by reserves and resources. An updated preliminary feasibility study estimates proven and probable reserves total 47.3 million ounces of gold and 7.3 billion pounds of copper
Seabridge was up 13% for the week to $22 a share.
Kitco Roundtable is sponsored by Revival Gold. Revival Gold is one of the largest, pure gold, mine developers in the United States. The Company is advancing engineering and economic studies on the Mercur Gold Project in Utah and mine permitting preparations and ongoing exploration at the Beartrack-Arnett Gold Project located in Idaho.
Revival Gold is listed on the TSX Venture Exchange under the ticker symbol “RVG” and trades on the OTCQX Market under the ticker symbol “RVLGF”. The Company is headquartered in Toronto, Canada, with its exploration and development office located in Salmon, Idaho.
Copper futures slid 7% to $4.20, the metals worst drop since 2022, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
Worries about China's economy hurt copper. However, gold hit an all-time mid-week on Federal Reserve's pivot, as well as U.S. political developments.
In mining news, Panama’s government says it will engage with First Quantum Minerals Ltd. in the coming months to discuss the environmental impact of its shuttered copper mine, according to a report by Reuters. The mine was closed by the government last year. Cobre Panama is a top ten copper mine.
Serbia, the European Union and Germany inked on Friday a series of deals granting EU members and some of the continent’s most important carmakers exclusive access to Serbian lithium, also according to a report by Reuters. Jadar is one of the largest lithium deposits in the world.
Victoria Gold said there is "no assurance" the mine its Eagle Mine will reopen.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable.
In late June the Yukon mine suffered a heap leach failure at its Eagle Gold Mine. Eagle employs about 500 people. This week, the miner provided an update on its investigation.
Gold prices ended their second week above $2,400 an ounce. Gold is seeing fresh bullish momentum following relatively dovish comments from Federal Reserve Chair Jerome Powell, coupled with weaker-than-expected inflation in the Consumer Price Index.
Large investments in copper projects show that miners are optomistic about the metals long term prospects, notes mining audience manager Michael McCrae.
On Saturday McCrae recorded an episode of Roundtable.
Copper had another down week, with its second consecutive drop. Copper futures were down 1% to end at $4.37.
Big copper investments were announced this week, despite the metal's weakness.
Reuters reports that copper miner Freeport Indonesia launched its $3.7 billion copper smelter in Gresik, East Java. The smelter’s total input capacity is 1.7 million metric tons of copper concentrate and output capacity will reach around 650,000 tons of copper cathode and 50 to 60 tons of gold.
Reuters also reported that Uzbekistan’s Almalyk and Metals Combine (AGMK) plans a $15 billion expansion program to increase copper cathode output to 400,000 metric tons a year by 2030 from 148,000 tons currently.
Precious and industrial metals end the week on a down note, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
Metals fell after the latest data showed the U.S. housing market underperformed expectations in May, and more investors become spooked about a broader market downturn.
In mining news, both Pilbara Minerals and Vale announced big expansion plans.
Gold, silver and copper were all flat this week after big economic news from the Fed, noted Michael McCrae, mining audiences manager.
On Saturday McCrae recorded an episode of Kitco Roundtable.
On Wednesday the Consumer Price Index was released. The CPI declined to 3.3% on a yearly basis in May from 3.4% in April The latest inflation data was weaker than expected. The number was reassurance for the Fed that it is making progress in taming inflation.
Later on Wednesday the Federal Reserve announced that it sees one rate cut this year, down from three estimated in March. The Federal Reserve's interest rate estimate, also known as the dot plot, shows the Fed funds rate ending the year above 5.00%. Interest rates were unchanged within a range of 5.25% to 5.50%.
Gold was roughly back where it started, at the $2,330 level, ditto with silver at the $29 level. In industrial metals, copper was flat, too, at the $4.50 level.
Commodities sold off this week on the personal consumption expenditures report released on Friday, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable sponsored by Snowline Gold.
The report was mixed. Inflation tracked sideways and consumer spending weakened. Analysts say there is little clarity that U.S. central banks will be able to cut rates in the fall.
On Wednesday it was announced that BHP (ASX: BHP) ended its attempt to buy Anglo American (LON: AAL). The deal topped at $49 billion.
The Federal Reserve put the brake on the metals rally.
On Friday mining audiences manager Michael McCrae recorded Kitco Roundtable sponsored by Snowline Gold.
At the start of the week, gold prices rallied to a record high above $2,450 an ounce as markets started to solidify expectations that the Federal Reserve was on track to cut rates two times this year, according to a report by Editor Neils Christensen.
But at the May FOMC meeting, the minutes showed a general lack of confidence around the inflation outlook and much uncertainty around the timing of potential rate cuts. It also appeared that the Fed thought disinflation is further out. The news weighed on metals.
Gold ended the week down about $100 lower. Gold finished the week at the 2,330 an ounce level. Silver shed $2 and was down at $30 an ounce.
Copper was down nearly 7%. After surging to an all-time high on Monday of $11,000 a ton, hawkish comments by the Fed and reluctance to spend on copper at such high prices by Chinese factories saw the metal fall.
Just ahead of the weekend, silver prices have broken above $30 an ounce, hitting an 11 year high, and the metal is up nearly $10 for the year, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable sponsored by Snowline Gold.
Silver miners have broken higher. This month First Majestic is up 16%, Hecla Mining gained 14% and Endeavour Silver jumped 46%.
Soaring silver prices have pushed the gold-silver ratio below 80 points, and it has been trading at its lowest level since August. The low ratio gives hope that the metal could keep rising.
Mass protests erupted in New Caledonia regarding voting rules for an upcoming independence referendum.
French troops have been deployed and a state of emergency has been imposed.
New Caledonia has about 10% of the world's nickel reserves, and is ranked the fourth largest producer.
Nickel jumped about 5% this month to about 21,000 a ton.
After two weeks of consolidation, gold is attracting some new bullish attention after holding initial support at around $2,300 an ounce, noted mining audiences manager Michael McCrae.
On Saturday, McCrae recorded Kitco Roundtable.
Bouncing off its lows at the start of the week, gold hit a two-week high finishing the week at $2,360 level, up about $30 for the week. Silver has managed to push back above $28 an ounce after holding critical support levels.
Copper soared finishing the week near $4.65 a pound. In another measure, copper broke through the magic $10,000 a ton level. Copper could face headwinds with Chinese manufacturers refusing to pay high copper prices.
Reuters reported that the Philippines wants to add three more processing plants in an "effort to develop a downstream industry for its abundant nickel resources, after nations such as China and the United States expressed interest in the mining sector."
The gold market is spinning its wheels, caught in a stalemate, which could create some profit-taking among investors and weigh on prices in the near term, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
Heading into the weekend, markets continue to digest the disappointing nonfarm payrolls numbers. The U.S. economy created 175,000 jobs last month, according to the Bureau of Labor Statistics. The monthly figure missed expectations as economists were looking for job gains of 238,000.
At the same time, the unemployment rate increased, and wages didn’t rise as much as expected.
This was initially good news for the gold market, and prices briefly popped; however, in a fatigued market, many traders used the rally to sell. The gold market has managed to hold support above $2,300 an ounce, but it is ending the week with a roughly 1% loss.
After its massive $400+ rally, the gold market continues to consolidate and trend lower as sentiment normalizes. The focus again turns to the Federal Reserve’s monetary policy and interest rates.
According to analysts, gold investors need more clarity from the Federal Reserve as a rate cut this summer becomes increasingly unlikely.
Given higher than expected inflation print this week, the Federal Reserve is less likely to lower interest rates.
On Friday mining audiences manager recorded Kitco Roundtable.
Gold investors could see higher volatility next week as the Federal Reserve is expected to signal it will not be ready to lower interest rates before the summer.
The weakness comes as the Federal Reserve’s preferred inflation gauge – the core Personal Consumption Expenditures (PCE) index – showed that inflation remains higher than preferred, rising 2.8% over the prior year in March, above estimates for 2.7%
On Wednesday the Fed will make an interest rate announced followed by a press briefing by U.S. Federal Reserve Chair Jerome Powell.
Mid week Bloomberg reported that BHP Group has made an unsolicited offer for Anglo American.
BHP Group is the world's largest diversified miner with a market cap of about $150 billion.
The deal could equal $39 billion making it one of the largest mining deals in decades. BHP is interested in Anglo American's copper assets. Anglo American is expected to produce 730–790 kt of copper in 2024 mostly due to operations in Chile and Peru.
With Middle East conflict unwinding, a focus on the Fed could slow gold's momentum.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable.
For now, the Israel-Iran conflict seems to have tamped down, which removes some safe-haven demand for gold and puts renewed focus on the Federal Reserve’s monetary policy.
This week Federal Reserve Chair Jerome Powell surprised markets with a brief hawkish comment. While speaking at an event in Washington, D.C., Powell said that after the release of hotter-than-expected inflation data, the central bank has less confidence it is ready to cut interest rates. A June rate cut is basically off the table, and markets only see a 50/50 chance of a July rate cut.
In mining news the Biden Administration denied the building of an access road to Triology Metals' base metals project in central Alaska. The the Upper Kobuk Mineral Projects is a joint venture with South32 50/50. Triology dropped about 25% for the week.
Gold jumped another 5% this week with June gold futures hitting $2,350 an ounce.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable.
Copper was also on fire, which were up 4.6% for the week to close above $4.20.
The copper miners are up 20% year to date and trading at a 52 week high. Gold miners are up just 10% year to date, according to the GDX.
U.S. job growth blew past expectations in March and wages increased at a steady clip. However the strong job numbers suggest that the Federal Reserve will put off a rate hike to later this year.
Metals could get a lift with the Fed signaling that it wants to cut interest rates, note mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
Gold ended the week flat with spot at $2165.The metal did spike mid-week. The Federal Reserve has given the all-clear to gold after signaling it still wants to cut interest rates three-times this year, even as inflation remains above the 2% target.
In mining news Calibre Mining (TSX: CXB) announced a C$100 million bought-deal financing at a price of $1.68 per common share of Calibre. Calibre is a mid-tier gold producer with operations in Newfoundland & Labrador in Canada, Nevada and Washington in the U.S., and Nicaragua.
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Copper gained nearly 6% this week to trade above $4 pound, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
Copper got a boost with news that potentially less metal will be available. According to Reuters, China announced that it was cutting production at some loss-making copper smelters. Copper bulls see years of low prices along with diminishing production as a good sign for the metal when the energy transition theme fully kicks in.
The lithium sector looked bullish with big financings announced. Lithium Americas received a record $2.2 billion loan from the US Department of Energy (DOE) to finance the construction of processing facilities at Thacker Pass in Nevada. Liontown Resources (ASX:LTER) announced this week a A$550 million debt facility to fund the company's Kathleen Valley lithium project through first production and ramp-up to the 3Mtpa base case.
Gold's run is having limited benefit for gold miners, noted mining audiences manager Michael McCrae.
On Saturday, McCrae recorded Kitco Roundtable.
After an impressive seven-day rally, which pushed prices to an all-time high of $2,203, the gold market could see some consolidation in the near term, writes editor Neils Christensen. Profit taking and the lack of any near term catalysts could dampen gold's run going forward.
Gold's run has had muted impact upon gold equities. Although gold companies are up 9% this month, they are still down for the year and more than half their all time high early last decade.
According to a report by Reuters, the Romanian government said on Friday it won an arbitrage trial filed by Canada's Gabriel Resources (GBU.V). The company planned to build Europe's largest open pit gold mine in the western Romanian town of Rosia Montana.
Gabriel Resources had sought at least $4.4 billion in damages from Romania.
Both copper and gold were higher this week with signs that the Fed may be easing as soon as June.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable with correspondent Paul Harris.
Gold recovered after tumbling mid week due to a hotter than expected CPI number, noted mining audiences manager Michael McCrae.
On Saturday McCrae and Kitco correspondent Paul Harris recorded Kitco Roundtable.
On Tuesday the Labor Statistics said that its Consumer Price Index rose 0.3% in January, higher than the Consensus forecasts of 0.2% increase. Markets tumbled and gold dropped below the 2000 level.
The week started with a tragic mine accident in Turkey. SSR Mining suspended production at its Copler mine after a landslide resulted in at least nine miners missing.
New Gold announced a big production update this week, noted mining audiences manager Michael McCrae.
On Saturday, McCrae recorded Kitco Roundtable with correspondent Paul Harris.
New Gold reported that consolidated gold production is expected to increase by approximately 35% from 2023 to 410,000 to 460,000 ounces in 2026 driven by increasing production profiles at both Rainy River and New Afton as growth projects are completed in the near-term. The company still sold off in a down market for gold miners, off 6% for the week to $1.58 a share.
New Gold is a Canadian-focused intermediate mining Company with a portfolio of two core producing assets in Canada, the Rainy River gold mine and the New Afton copper-gold mine.
The other precious metal, silver, shows promise. According to Christopher Vecchio, Head of Futures & Forex at Tastylive.com, the metal is near a year low. It also does well during periods of volatility. The U.S. is heading into an election year. The congress is also setting up for a budget fight.
Metals traded lower end of week when jobs data came in stronger than expected, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable with Kitco correspondent Paul Harris.
On Friday jobs data showed the U.S. economy created a whopping 353,000 jobs last month, significantly beating expectations. Markets see only a 20% chance of a rate cut in March, and they have pared back expectations for a rate cut in May.
Copper spiked mid-week, nearing $4 pound to settle back where it started, due to the strong job's number. Gold finished the week near the 2050 level, mostly flat for the week.
In mining news British Columbia's Nisga'a Nation is establishing Canada's largest majority Indigenous-owned public company. The new royalty company includes mining heavy hitter Frank Giustra, who will be strategic advisor to the newly-formed Nations Royalty.
The copper market is setting up nicely and prices for the metal should head higher, noted Kitco correspondent Paul Harris.
On Monday Harris, mining audiences manager Michael McCrae and Soar Financial CEO Kai Hoffmann recorded Kitco Roundtable at the Vancouver Resource Investment Conference.
Harris noted that copper supply is starting to dwindle, while energy transition is increasing demand.
The three panelists also noted the downbeat mood at the first major mining show of 2024, as resource companies hope to turn the page on a mostly forgettable 2023.
A Chinese miner made a large investment into a Latin American copper developer, noted Kitco correspondent Paul Harris.
On Saturday Harris and mining audiences manager Michael McCrae recorded Kitco Roundtable.
Earlier this week Solaris Resources announced a $130 million strategic investment by Zijin Mining Group. Solaris is advancing its Warintza project, a high-grade open pit copper resource in Ecuador.
McCrae noted that both gold and copper were under pressure due to a hawkish turn by the Federal Reserve.
Uranium leaped to a new high, noted mining audiences manager Michael McCrae.
On Saturday McCrae and Kitco correspondent Paul Harris recorded Kitco Roundtable.
Uranium traded as high as $100 this week according to pricing data provider UxC. The metal is has tripled in the past two years. Uranium was propelled higher when mining giant Kazatomprom announced a production shortfall of the metal due to lack of sulphuric acid needed for production.
Gold has had a solid year, overcoming the Fed's higher interest rate regime, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
Spot gold managed to finish the final trading day of 2023 in the 2060 range, up about $200 from the start of the year.
In mining news top ten gold miner, Agnico Eagle (NYSE: AEM), announced today it was investing $23.12 million in Canada Nickel Company (TSXV: CNC). Agnico will own about 12% of the Ontario-focused, early-stage nickel company.
On Friday gold prices fell on strong job numbers from the U.S., noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
Friday was jobs day. The U.S. economy created 199,000 jobs last month, beating expectations. At the same time, the unemployment rate dropped to 3.7%, down from 3.9% in October.
The strong economy implied that the Fed is further away from easing. On the news gold prices hit a two-week low and silver a three-week.
According to some analysts, Monday's rally and subsequent selloff was not helpful for gold's long-term price action.
In mining news depressed platinum prices have forced miners to lay off workers.
Anglo American is preparing to freeze spending on growth and widen job cuts in South Africa. Reuters reports that the miner is preparing to mothball some high-cost platinum mines.
Last week Sibanye-Stillwater, the other major platinum producer, said it was cutting about 100 employees and 187 contract workers at its Stillwater West mine in Montana
Platinum prices have declined 11% for the year.
Gold finally hit a record high, and the copper markets had a big supply shock, said mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
February gold futures last traded at $2,091.90 an ounce, up more than 4% from last Friday's close. Gold's previous record was at $2,089.20 in August 2020, wrote Kitco editor Neils Christensen.
Gold is seeing renewed buying momentum as markets continue to price in a potential rate cut as early as March. The precious metal's rally comes even as the central bank maintains its tightening stance. Friday, Federal Reserve chair Jerome Powell said that he is still not confident monetary policy is sufficiently restrictive enough to bring down inflation to 2%.
In mining news, First Quantum was the story. Panama's top court declared that First Quantum's contract with the government to operate a key copper mine was unconstitutional. Panama's president, Laurentino Cortizo, then closed the mine.
First Quantum is a top 10 copper miner.
To end the week gold has spent much of the time trading above $2,000 a ounce, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
After the good CPI numbers earlier this month that may allow the Fed to stop hiking, gold has found room to rise.
Notable economic number this week were the the S&P Global Flash U.S. manufacturing and services PMI.
Manufacturing contracted while services expanded. Bottomline is that the numbers put the U.S. economy at neutral.
Copper was up again this week, nearing the $3.80 lb point. Supply disruptions favored the metal, which segues to mining news.
In mining news, First Quantum is facing supply disruptions and a looming court decision.
Protestors in Panama are blocking supplies from reaching the mine. Without relief, the company warned that production could be halted.
The mine also faces legal challenges. It's recently signed mining contract it signed with the government is being challenged in the supreme court. A decision is expected in the coming days or weeks. A majority of lawyers surveyed by Reuters said
the Supreme Court is likely to rule against the company, citing a precedent.
Commodities and markets were up this week off the good consumer price index report, which came in below market expectations, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
The GDX, a index of gold miners, was up 5% on the week. The S&P was up half that amount. Gold added about $40 for the week to end at the 1980s range.
Mid-week consumer price index report was below Wall Street estimates, which sparked a major rally on Wall Street. The core CPI rose 0.2% and 4%, against the forecast of 0.3% and 4.1%. The annual rate was the smallest increase since September 2021, according to CNBC.
Copper was up 4% this week. Even better for miners is that oil prices were mostly flat on the week with WTI trading in the mid 70s.
The big mining news from the start of the week is when Glencore bought 77% of Teck Coal Business for $6.93 Billion. Nippon Steel took the remaining portion.
In a news release Jonathan Price, President and CEO, Teck. said the sale will ensure Teck is well-capitalized and able to
realize value from its base metals business and re-focus Teck as a Canadian-based critical minerals champion
Commodities traded down this week after the Federal Reserve Chair Jerome Powell made hawkish remarks at a news conference.
On Sunday mining audiences manager Michael McCrae recorded Kitco Roundtable.
Powell warned markets that although inflation has come down from last year’s 40-year highs, the Fed still has work to do. He said that the central bank is not “confident” that it has inflation under control enough to shift its current tightening bias, according to reporting by editor Neils Christensen.
Powell also said that the Federal Reserve wouldn’t hesitate to raise interest rates if inflation pressures start to rise again.
Gold investors did not like Powell’s latest message to financial markets as prices have dropped below support at $1,950 an ounce and ended the week down nearly 3% from last Friday.
Copper followed gold down, too. The metal was off nearly 3% after last week's rise. It traded at $3.60.
De Beers sales plunge in ninth cycle of 2023, which was $80M lower than the same cycle a year ago. Al Cook, CEO of De Beers, commented, "Macro-economic challenges continue to affect the diamond sector. The retail recovery in China remains slow.
Gold is deferring a break higher, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable with correspondent Paul Harris.
Key economic news this week was the jobs report. Non-farm payrolls number come in at up 150,000 versus market expectations of 170,000. The report fell into the camp of the U.S. monetary policy doves, who want the Federal Reserve to stop raising interest rates.
Gold was helped but not much. Spot gold finished the week at $1,998 ounce.
Gold’s inability to convincingly break above $2,000 an ounce is creating some cautious sentiment in the marketplace, with some analysts saying that prices might need to consolidate in the near term before the precious metal takes a run at its all-time highs, wrote Kitco editor Neils Christensen.
In mining news Harris noted that Ero Copper agreed with Vale to enter into an earn-in agreement for a 60% interest in the Furnas copper project.
A Fed rate-hike pause at next week's FOMC meeting is likely, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris.
Also noted during Roundtable was Piedmont Lithium and partner Atlantic Lithium obtaining permits for the Ewoyaa project in Ghana.
War worries and a possible end to Fed tightening are some of the reasons gold is rebounding, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris and QC Copper & Gold CEO Stephen Stewart.
The gold price has been on an unstoppable move higher when war fears entered the marketplace last week, that according to Kitco contributor David Erfle. Despite the U.S. 10-year bond yield rising to 5%, the safe-haven metal has risen from $1825 just two weeks ago to move closer to the key $2000 level notching up an impressive gain of 9%, so far this month.
Adding to support is the Federal Reserve. At the Economic Club of New York Thursday, Fed Chair Jerome Powell reiterated his stance that interest rates will have to be higher for longer, but he provided little new guidance on monetary policy heading into year-end.
Analysts have noted that the gold market has priced in a lot of bad news already, and the Federal Reserve, near the end of its tightening cycle, should not provide the same headwinds for the precious metal, wrote Kitco's Neils Christensen.
Stewart's QC Copper & Gold (TSXV: QCCU) is focused on acquiring and developing copper projects in Quebec. The company is focused on its Opemiska property. A maiden resource estimate for the property showed 81.7M tonnes @ 0.88% CuEq of pit constrained measured and indicated mineral resources and 21.3M tonnes @ 0.73% CuEq of inferred mineral resources.
"Historically speaking, billions and billions of pounds of copper have come out of Quebec," said Stewart.
The set up for copper looks good, said EMX Royalty CEO David Cole.
On Friday Cole recorded Kitco Roundtable with mining audiences manager Michael McCrae.
With the Federal Reserve looking to be near the end of its tightening cycle and geopolitical concerns, the vice-grip that monetary policy has exerted on gold through most of 2023 is starting to weaken, giving the market room to run.
After hitting a seven-month low a week ago, the precious metal is seeing its best weekly gains since mid-March, noted Kitco's Neils Christensen. Prices are over $90 higher than last week's closing price, with December gold last trading at $1,941.50 an ounce, and are up more than 6% from last week's lows.
EMX Royalty (TSX-V:EMX) is a precious, base and battery metals royalty company. Some highlight assets are Timok Magmatic Complex in Serbia and Caserones, a copper and molybdenum mine in Chile. The company asset mix is 56% gold and 22% copper.
"I do expect the copper side of that equation to continue to increase with our exposure to Caserones..operated by Lundin Mining and of course Timok," said Cole. "Those are two generational copper assets with very long lives within our portfolio. Generally speaking, we love the metals across the periodic table and are happy to be exposed to them all, but if you ask me what my favorites are I'd say that copper is the most strategic."
3:00 - Focus on royalties
4:00 - More deal flow for royalty and streaming companies during a downturn
4:33 - Timok settled dispute
5:20 - Asset mix at EMX Royalty
Many commodities were routed in October, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with Kitco correspondent Paul Harris.
Gold prices dropped to a fresh seven months below after data showed that the us economy created 336,000 jobs last month, significantly beating the market's expectations. However, according to some analysts, disappointing wage growth and an unchanged unemployment rate gives the federal reserve room to leave rates on change next month.
And with that gold recovered slightly and finished the week in the 1840 range, copper traded lower this week to hitting its lowest point since May. The big commodity surprise was oil. Early this month, oil looked like it might crest $100 a barrel prices, but prices retreated sharply, and now a barrel can be had for the low 80s.
During the last week of September, gold suffered its second largest monthly decline of 2023 with only February having a greater devaluation of gold futures, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
The precious metal droped 5%, nearly $100. According to Kitco contributor Gary Wagner, the root cause the Federal Reserve including a major revision that was announced at last week’s September FOMC meeting.
In mining news, battery metal investments led the headlines.
Swedish lithium-ion battery manufacturer Northvolt announced that it will establish a fully integrated lithium-ion battery gigafactory near Montreal, Quebec. Spend is $5 billion and the plant will employ up to 3,000 people.
Due to travel schedules, we reprised an interview with Exploration Insights’ Joe Mazumdar.
Mazumdar spoke to Kitco in mid-September at the Precious Metals Summit 2023 in Beaver Creek, Colorado. Mazumdar is editor and analyst of Exploration Insights. Brent Cook, who is founder of Exploration Insights, also joined the interview.
There is a big disconnect between gold prices and gold miners, noted panelists on Kitco Roundtable.
On Friday mining audiences manager Michael McCrae, Kitco Correspondent Paul Harris and David Erfle with the juniorminerjunky.com recorded Roundtable at the Precious Metal Summit in Beaver Creek, Colorado.
During the first quarter of the year, gold futures traded above $2,000. Since then, the metal has mostly traded within a healthy band of $1,900 to $2,000. Yet, the gold mining index, the GDX, is down 3% year-to-date, while the tech-heavy NASDAQ composite is up nearly one-third.
Gold mining shares..."look like the gold price, you just have to turn the charts upside down," noted Erfle. "It's an amazing dichotomy."
Erfle said there are just better options for investors with elevated inflation, good rates on T-bills and other parts of the market showing more promise.
Harris noted the toll the gold market is taking on investors and companies.
"It's grinding down the management teams," said Harris "People have commented to me that they love the sector...but the joy has gone out of it, because it's relentless—the endless calls from disgruntled investors about when it's going to turn around."
Kitco Roundtable is sponsored by Snowline Gold.
While gold and copper slipped 1% and 3.5% respectively this week, oil is gaining, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable with correspondent Paul Harris.
Copper prices dropped 3.5% this week to finish at the low $3.70 level. Gold trended downward this week, with prices falling around 1% after the Labor Day holiday finishing the week at $1,919 an ounce.
But oil is surging. On Tuesday Brent crude saw $90 a barrel for the first time since November, a 10-month high. Oil gained on news that Russia and Saudi Arabia committed to reducing production over a longer period of time.
Base metals are trading higher due to China's efforts to shore up its struggling property sector, noted mining audiences manager Michael McCrae.
On Friday, McCrae recorded Kitco Roundtable with correspondent Paul Harris and Srini Godavarthy, the CEO of Li-Metal.
China is issuing directives to prop up its property sector, such as easing borrowing rules to aid homebuyers. Other measures included lowering the existing mortgage rate for first-home buyers and the down payment ratio in some cities, noted Reuters.
Worries about China's economy has been a drag on metals through most of the summer, but cvopper prices rallied this week adding nearly 10 cents. As of 2:23ET, copper futures were trading at $3.88.
Godavarthy noted that there has been significant investment in battery technology as energy transition and EV adoption gather pace. Li-Metal is focused on metal anode and lithium metal production technologies.
All eyes were on the Jackson Hole meeting in Wyoming, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris and Stillwater Critical Minerals' CEO Michael Rowley.
Stillwater Critical Minerals (TSX.V: PGE | OTCQB: PGEZF) is a Canadian mineral exploration company focused on its flagship Stillwater West Ni-PGE-Cu-Co + Au project in the Stillwater mining district of Montana, U.S. 2023 drilling is currently underway. In the spring the company received an investment from mining giant Glencore.
On Friday Fed Chair Jerome Powell gave a much-anticipated speech at the key economic gathering striking a hawkish tone on U.S. monetary policy, saying that the inflation fight is not finished and the Fed still “has a long way to go” to get inflation tamed.
Powell said the U.S. economy may not be cooling down like the Fed wants to see in order to choke off inflationary pressures. He also noted that the U.S. central bank is prepared to raise interest rates further, if warranted.
Bottom line from Fed observers: hawkish, but not that hawkish.
The world's largest diversified miner, BHP Billiton, released its fiscal year end. BHP had its weakest annual profits in three years – weighed down by soft iron ore prices. China’s sluggish economic revival and the West’s hawkish response to inflation were hurting the miner's numbers.
Regarding China, the key commodity country's economic fate is in the government's hands. BHP wrote that trajectory is contingent on the effectiveness of recent policy measures.
Metals are sliding due to recession worries, higher for longer rates and China concerns, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris.
China is the story that is dominating commodity markets. A handful of large Chinese property development companies are under stress. Today Evergrande announced it filed for bankruptcy protection in the US. Earlier this week China's largest private real estate developer Country Garden missed a bond payment.
With China worries, investors fled to the U.S. and the dollar gained. The dollar hovered around a two-month high on Friday. The dollar is set for its fifth consecutive week of gains in the longest winning streak for 15 months, according to a report by Reuters.
As of noon ET Friday, gold had dropped through $1,900 level to trade in the $1,890 range. Oil is at the $80 barrel level, and copper is near $3.70 lb.
Even critical metals are not immune.
Tesla (TSLA) has trimmed prices on its Model S and Model X cars in China. The prices are being reduced by more than 6%.
Tesla is down 10% for the week.
The lithium index is down 5% over the past five days and trading at a 52-week low.
There was some bullish news. On Thursday a consortium of Ford and South Korean companies announced a C$1.2 billion ($887 million) plant to produce electric vehicle (EVs) battery materials in Becancour, Quebec.
Gold did not get much of bounce from the favorable job numbers, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with Kitco correspondent Paul Harris.
U.S. nonfarm payrolls rose by 187,000 last month, according to the Bureau of Labor Statistics, which released the numbers on Friday. The monthly figure was below the market consensus estimates of 205,000.
The gold market didn't react much. December gold futures last traded at $1,970 an ounce, roughly unchanged on the day.
Companies are releasing their second quarter financial results. In its outlook, uranium giant Cameco raised its revenue forecast due to momentum in the nuclear sector and supply risk caused by geopolitical developments.
Albemarle, a leading global producer of specialty chemicals, reported net sales of $2.4 billion in Q2. In its outlook the lithium miner said net sales are expected to increase 40% to 55% over the prior year, primarily driven by the continued global shift to electric vehicles. The year-over-year increase in Adjusted EBITDA is expected to be in the range of 10% to 25%, primarily due to higher energy storage pricing.
The gold market is seeking direction, noted Kitco's mining audience manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with Kitco correspondent Paul Harris.
McCrae noted that the big news this week was the Federal Reserve pushing interest rates to a 22-year high on Wednesday. The Fed resumed its hikes from last month's pause. The big data point this week was core Personal Consumption Expenditures price index increased 0.2% last month, compared to May's increase of 0.3%. The report revealed that in June inflationary pressures continues to diminish while consumer spending continues to expand. The news sent equity markets higher.
Despite the data, analysts say markets are too unsettled.
"The market is desperate for any type of clarity. Right now, the Federal Reserve is going to maintain their hawkish bias because they want to see inflation go down further, so any soft data that will shift that bias will be good for gold," argued Kevin Grady, president of Phoenix Futures and Options, in an interview with Neils Christensen.
The drop in commodity prices have been hitting the base metal miners.
Rio Tinto said its net earnings amounted to $5.1 billion for the six months ended June 30 2023 (HY23), down 43% compared to HY22. In a press release, Rio Tinto noted "softer” market conditions.
Teck that saw Q2 profits of C$510 million compared to C$1.5 billion a year prior.
Gold approached $2,000 earlier this week but then fizzled as the upcoming Fed hike weighed, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
The Fed skipped a raise in June. There were signs that the Fed is winning its inflation battle with favorable data about jobs and inflation, but the Fed will not be deterred. Analysts say that The Fed is almost certain to hike its policy rate by 25bp to between 5.25% and 5.50% at next week's FOMC meeting.
Gold finished the week in the $1,960 range.
Copper was off for the week. China did introduce a modest stimulus to boost automobile and electronics consumption, but it didn't climb the wall of worry. Slow China growth has been an anchor on copper. Copper futures dropped about 2%. Last checked copper was in the 3.80 a pound range.
Newmont (NYSE: NEM) (TSX: NGT), the world's largest gold producer, announced this week that its Q2 2023 attributable gold production decreased 17% y-o-y to 1.24 million ounces primarily due to lower production at Peñasquito, Akyem, Merian, Cerro Negro and Boddington. However, Newmont affirmed guidance.
Newmont dropped three percent on the week. Newmont acquisition target, Newcrest, was down 2% for the week.
There may be some bullishness. Equipment makers have been reporting some strong quarters. Sandvik reported that its revenue grew 16% in the second quarter. Mining equipment company Epiroc said this week that revenue was up 34% in Q2
A good inflation report pushed the gold market to a three-week high, with prices holding solidly above $1,950 an ounce, and sentiment turning bullish, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
Roundtable covered the lift in metal prices due to good inflation numbers. The Consumer Price Index dropped to 3%. The Producer Price Index for final demand rose 0.1%. Economists surveyed by Dow Jones were expecting an increase in the PPI of 0.2%.
Roundtable also features an interview with Fastmarkets' CEO Raju Daswani. Last month Raju hosted his company's 15th Lithium Supply and Battery Raw Materials 2023 show held in Henderson, Nevada.
Lithium companies enjoy a funding advantage, noted Bradda Head Lithium CEO Charles FitzRoy.
On Friday FitzRoy recorded Kitco Roundtable with mining audiences manager Michael McCrae.
Bradda Head is advancing projects in Arizona and Nevada.
With energy transition underway and governments supporting critical mineral businesses, FitzRoy noted that lithium companies have more options to raise money to continue their work.
"There's a lot of support around funding," said FitzRoy. "Whether it's from [the Inflation Reduction Act] or from OEM's or major miners getting interested in the lithium space... that's enabling small companies like ours to grow."
Roundtable also talked about the rebound in gold off the Friday's job's numbers and China restricting the export of gallium and germanium.
Robert Friedland warned about a coming copper crunch due to increasing demand and dropping supply, noted Kitco correspondent Paul Harris.
On Friday Harris recorded Kitco Roundtable with mining audiences manager Michael McCrae.
The bleak picture for gold stocks was also covered. Gold is seeing its worst month since February as markets shift expectations, pricing in a nearly 100% chance of a rate hike in July.
After kicking off the month above $1,980 an ounce, gold finished June at the $1,910 level.
McCrae talked about some of his favorite #MinTwit follows on Twitter: @michaelbhorner, @jrminingguy and @miningcatalyst.
The book McCrae is reading is The World for Sale: Money, Power, and the Traders Who Barter the Earth's Resources.
Gold ended its worst week since February as the Federal Reserve's outlook of two more rate hikes weighed on the precious metal. But some analysts don't see the macro picture supporting that hawkish view.
On Saturday mining audiences manager recorded Kitco Roundtable.
The gold market was down around $40 on the week, with August Comex gold futures last trading around the $1,930 level.
China unveiled on Wednesday a 520 billion yuan ($72.3 billion) package of tax breaks over four years for electric vehicles (EVs) and other green cars, its biggest yet for the industry as it seeks to boost slower auto sales growth, that according to Reuters.
Gold could make a decisive move either up or down next week, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
The gold market has been steady so far in June, trading between $1,940 and just under $2,000 an ounce, writes Kitco reporter Anna Golubova. But after weeks of sideways price action, gold could be ready for a significant move in either direction with gold retesting the $1,880 level or getting back up to around $2,000.
In lithium news Delta Lithium (ASX:DLI) said today that Japanese conglomerate Idemitsu will invest about A$46.4 million in Delta at $0.7075 per share.
Also this week Midland Exploration optioned several lithium properties in Quebec to Rio Tinto for up to $65.5M in expenditures and other payments
Unprecedented forest fires in Quebec forced shut downs at several mining operations in the province, noted Kitco correspondent Paul Harris.
On Friday Harris recorded Kitco Roundtable with mining audiences manager Michael McCrae and CEO and Co-founder of VRIFY, Steve de Jong.
Unseasonably warm weather resulted in over 150 active fires in Quebec. The plight of the province gained international attention when smoke from the fire enveloped New York City in a deep haze.
Several miners, developers and juniors suspended operations due to operating hazards in Quebec. Wesdome Gold Mines (TSX: WDO) announced yesterday that it temporarily suspended underground activities and surface exploration activities at the Kiena Mine in Val d’Or, Quebec. Earlier in the month Hecla Mining (NYSE: HL) suspended operations at its Casa Berardi mine.
Steve de Jong joined the podcast to talk about his company's recent raise, $6 million in Series A funding co-led by RCF Jolimont Innovation and Beedie Capital, with participation from Tiny.
In its press release the company said the money will be spent on developing better communication tools.
“A strong critical mineral supply chain is essential for reaching our global energy transition targets, but without a significant shift in the way the mining sector communicates to investors, this is unlikely to happen,” said Steve de Jong said in a news release announcing the investment. “The raise will help us redefine how deals are shared, understood, and secured.”
Gold dropped end of week after less than rosy economic data was released, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris.
The U.S. annual core Personal Consumption Expenditures price index came in at 4.7% in April versus the consensus forecast of 4.6%. The U.S. central bank favors this gauge because the core inflation strips out volatile food and energy prices. Gold fell following the data release, with June Comex gold futures last trading at $1,946.80 an ounce.
Data shows that inflation may not be coming down fast enough could increase bets that the Federal Reserve still has more room to tighten.
Major gold miners are down for the year. Newmont is off 18% year to date, Barrick is down about 5%.
The lithium sector saw a spate of deals early this week.
Ford Motor Company early this week inked supply agreements with Albemarle, Nemaska Lithium and Compass Minerals.
Albemarle will supply more than 100,000 metric tons of battery-grade lithium hydroxide for approximately 3 million future Ford EV batteries. The five-year supply agreement starts in 2026 and continues through 2030.
Nemaska will supply Ford with lithium products, including lithium hydroxide, over an 11-year period. The agreement calls for the delivery of up to 13,000 tons of lithium hydroxide per year.
Ford's big move comes after a lot of major mining deals before it. Early this year GM announced a $650 million deal with Lithium Americas.
Ford has done other deals. A year ago signing an offtake with ioneer and Liontown Resources.
Ford is the second-largest U.S.-based automaker
Lithium giant SQM plans to keep investing despite Chile's plan to exert more control.
On Friday mining audiences manager Michael McCrae and Melissa ‘Mel’ Sanderson, President North America at American Rare Earths recorded Kitco Roundtable.
American Rare Earths is developing its 100% owned magnet metals projects, Halleck Creek in Wyoming and La Paz in Arizona.
Sanderson talked supply and demand in the rare earth sector.
Despite a tough market for precious metal exploration companies, Canadian Gold interim president and CEO Ian Ball said he has a plan to attract investors.
On Friday correspondent Paul Harris hosted Kitco Roundtable with Ball and Rob McEwen, chairman and chief owner of McEwen Mining.
Canadian Gold is a Toronto-based mineral exploration and development company whose objective is to expand the high-grade gold resource at the past producing Tartan Mine, located in Flin Flon, Manitoba. The company holds a 100% interest in greenfields exploration properties in Ontario and Quebec adjacent to some of Canada's largest gold mines and development projects, specifically, the Canadian Malartic Mine (QC), the Hemlo Mine (ON) and Hammond Reef Project (ON). The company is 37.6 % owned by Rob McEwen.
Ian Ball was the former CEO and president of Abitibi Royalties. In 2021 Abitibi Royalties was acquired by Gold Royalty.
During past precious metal run ups, gold investing was competing against rotations into cannabis or crypto, argued Soar Financial CEO Kai Hoffmann, but during this cycle the metal has the stage to itself.
On Friday Hoffmann recorded Kitco Roundtable with Kitco correspondent Paul Harris and mining audiences manager Michael McCrae. The podcast was recorded at Hoffmann's Deutsche Goldmesse show in Frankfurt, Germany.
Gold hit an all-time high last week. Silver has also been at near yearly highs.
"We actually don't have any competition right now as gold investors," said Kai Hoffmann.
"We had cannabis and Bitcoin before, but now there's no competition. I may be missing it, but I don't see it right now."
After Chile's President Gabriel Boric announced a nationalization plan for his country's lithium sector, miners are still striving to understand what the ruling means, noted Fastmarkets William Adams.
On Friday Adams recorded Kitco Roundtable with mining audiences manager Michael McCrae and correspondent Paul Harris. Adams is head of battery metals research at Fastmarkets.
Last week lithium miners dropped on news that Chile plans to nationalize its lithium sector, the world's second largest producer of the metal essential in electric vehicle batteries. The government said that nationalization would boost the country's economy and protect its environment.
After the news lithium giant Sociedad Quimica y Minera de Chile (SQM) dropped 18% to $63.44 a share. Albemarle slid 10% to $173.75.
The lithium space had already been hit by falling lithium prices, which Benchmark Mineral Intelligence says is down by half since the start of the year.
Adams said that there is not much clarity about the government's plans. Current contracts are supposed to be exempt from the government's new initiative.
"All these negotiations are going to take a long time," said Adams. "That creates a lot of doubt. It's going to take a long time before we get clarity. In the meantime, I think the danger is that it threatens further investment."
Despite lithium prices halving in 2023, Battery Materials Review Managing Editor Matt Fernley is optimistic about the metal.
On Friday Fernley recorded Kitco Roundtable with mining audiences manager Michael McCrae.
This decade lithium went on a stellar run, trading up 10x versus historical levels, but in 2023 the metal took it on the chin. In 2023 Benchmark Mineral Intelligence estimates that lithium prices have been cut in half. Fernley is sanguine.
"It is just a reasonable cyclical downturn," said Fernley, noting that there have been production cuts in Asia that should help the metal. "We're already below the marginal cost of production for a number of assets in China. That's going to continue in April. I believe that lithium prices will pick up over the next couple of months."
Other news weighing on the metal is Tesla's price cuts. Growth is still strong, noted Fernley, who expects 25% to 30% year-on-year growth in European EV demand.
Lastly, CATL said it is making advances in sodium-ion batteries. Fernley said the technology still needs to scale, and the material has to be sourced in large quantities. Lithium ion will not be substituted by the new technology.
"It would be quite difficult for the sodium ion supply chain to ramp up capacity. The problem is getting pure enough sodium hydroxide or sodium carbonate to use in your batteries."
While gold M&A has dominated resource headlines, the focus turned to base metals this week.
On Friday Kitco correspondent and mining audiences manager Michael McCrae recording Kitco Roundtable.
Glencore made an unsolicited $22.5 billion bid for Teck. So far Teck has fended off Glencore's advances.
The other M&A deal in the base metal side of the business was Hudbay Minerals (NYSE: HBM) and Copper Mountain Mining (TSX: CMMC). On Thursday the two announced that they were combining in a $439 million deal.
The surprise bid by Glencore for Teck was covered on Kitco Roundtable, recorded on Friday.
The week started with Glencore making an unsolicited $23 billion bid for Teck, which Teck rebuffed.
Also this week Pan American Silver, Agnico Eagle wrapped up their $4.8 billion deal to acquire Yamana Gold. Agnico Eagle now owns 100% of Canadian Malartic. The company's production in the Abitibi gold belt is forecast to be approximately 1.9 million ounces to 2.1 million ounces of gold per year through 2025.
While precious metal prices have been relatively high this year, it could be too early to leap into junior gold stocks, said Rick Rule, president and CEO of Rule Investment Media.
On Friday Rule recorded Kitco Roundtable with Kitco correspodent Paul Harris and mining audiences manager Michael McCrae.
Gold gained $150 in March — its best month since July 2020, noted Kitco's Anna Golubova. Analysts are seeing markets contradicting the Fed's messaging, and gold may have lots more upside, including testing and breaking record highs in April.
Gold stocks are catching up. The GDX, an index of gold companies, is up 18% for the month, but it is still significantly off its 52-week high.
"A move up may be right in terms of direction, but [investors] may be wrong in terms of timing," said Rule who likes the macro environment for gold but sees other factors weighing on the sector.
"When we are in a risk-off environment, the riskiest assets on the planet are non-producing exploration companies," noted Rick. "The gold price can go up, but the shares of companies that inconveniently happen to have not much gold will continue to go down."
The same news that drove gold higher this week also gave copper a lift, noted mining audiences manager Michael McCrae.
On Thursday McCrae recorded Kitco Roundtable with correspondent Paul Harris.
Gold started off the week strong due to wobbles in the banking sector. Credit Suisse, the European banking giant, was taken over by UBS on the weekend.
The markets then turned to the Fed and its rate hike. The Federal Reserve raised its main interest rate by a quarter-point, but the Fed also suggested that rates would not continue to rise. A weakening U.S. dollar also worked in favor of the metals, noted Kitco contributor Jim Wyckoff. On Thursday April gold was last up $47.70 at $1,996.90 and May silver was up $0.509 at $23.30.
The lower dollar also worked in copper's favor. The metal reached $4.11 pound mid week.
Looking ahead, McCrae noted that the resource sector should get a boost when the senior gold producers announce their first quarter financial results in April, which should be exceptional due to higher than average gold prices during the start of 2023.
Roundtable also talked about First Majestic Silver's Jerritt Canyon woes and Albemarle's big investment.
It is a tough time to finance gold exploration projects, says Ari Sussman, executive chair of Collective Mining, who just announced a S$30M bought deal, but conditions will improve as 2023 progresses as investors seek safe haven investments in real assets.
While relatively high gold prices favor the producers, weak financing conditions are going to be a drag on companies not yet producing, noted Kitco correspondent Paul Harris.
On Friday Harris recorded Kitco Roundtable with mining audiences manager Michael McCrae and Meridian Mining Executive Chairman Gilbert Clark.
Meridian Mine (TSX:MNO) is focused on advancing its Cabaçal gold-copper deposit in Brazil. Earlier this week the company released a positive preliminary economic assessment for the project showing an after-tax net present value of $573 million and a 58.4% internal rate of return using $1,650 oz gold and $3.59 lb copper. Clark said the project's strong economics is something not seen by the markets for many, many years.
Looking at the broader market, Harris said there are two factors that are holding back gold juniors.
"I think the outlook for the gold juniors, developers and the explorers is not quite so rosy," said Harris. "A lot of people think...it is going to be a tough year to raise equity."
Harris added that critical metal companies like copper and lithium have "taken off like a rocket" limiting the amount of funds available for precious metal companies.
"[With] a limited pool of capital available, that naturally means there's perhaps going to be less available for the gold juniors."
The gold index or GDX is down nearly 10% year-to-date and 30% for the year.
Although gold prices are down from the start of the year, miners still have healthy margins at the current price levels, noted Kitco correspondent Paul Harris.
In February Harris recorded Kitco Roundtable at BMO Global Metals, Mining & Critical Minerals Conference with Mining Audiences manager Michael McCrae and Adriatic Metals CEO Paul Cronin.
Adriatic Metals (ASX:ADT) will commence production at its Vares silver project in Bosnia & Herzegovina in Q3 of this year. Adriatic describe Vares as one of the highest margin polymetallic projects globally. Post-tax NPV is estimated at $1.062 billion and IRR at 134%.
After gold got as high as $1,960 ounce in January, Harris noted that the BMO conference opened in late February with the metal suffering a four-week slide dipping into the low $1,800 range.
"Perhaps [the drop is] a little bit painful, but the producers...still have 40% to 50% margins," noted Harris. "They're making a lot of money."
The Fed is expected to keep up its fight against inflation rather than ease, and that is bad for gold.
On Saturday Mining Audiences Manager Michael McCrae recorded Kitco Roundtable.
Early this week B2Gold said it would acquire Sabina Gold & Silver for C$1.1 billion (US$823.66 million).
On Friday's Roundtable mining audiences manager Michael McCrae and Kitco correspondent Paul Harris talked about yet another big M&A in the gold sector.
Early this month number one gold miner Newmont made a $16.9 billion offer for number seven ranked Newcrest. This week Newcrest said the offer under values the company.
McCrae and Harris also talked about LG Chem buying a stake in Piedmont Lithium.
Newcrest Mining, which has a number of assets in B.C., received a $16.9 billion bid from Newmont early this week.
On Friday Kitco correspondent Paul Harris discussed on Kitco Roundtable how Newmont's portfolio would change if the deal goes through.
By gold production Newmont is the world's number one gold miner. Newcrest is ranked number seven.
The gold market saw significant losses on Friday as the precious metal dropped $50 on the day following a shockingly solid employment report out of the U.S., said mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
The U.S. economy added a staggering 517,000 jobs in January as the unemployment rate dropped to 3.4% — the lowest level since 1969, noted Kitco reporter Anna Golubova. This took many by surprise as market consensus calls were looking for just 185,000 new positions.
This week's big mining news was General Motors making a $650 million equity investment in Lithium Americas to help advance Thacker Pass. A court decision is still pending on whether Thacker should proceed. Earlier this month a U.S. judge said she will rule "in the next couple of months" about whether former U.S. President Donald Trump erred in 2021 when he approved Lithium Americas Corp's plan to build Thacker, according to a report by Reuters.
Lithium Americas is targeting 80,000 tonnes per annum of battery-quality lithium carbonate from Thacker.
Gold finished last week with its sixth consecutive gain, but the Federal Reserve could slow the metal, noted mining audiences manager Michael McCrae.
On Monday McCrae recorded an episode of Kitco Roundtable.
Fed chair Jerome Powell is giving a press conference on Monday.
The Twin Metals decision was also covered. The Department of Interior cancelled two hardrock leases in northeastern Minnesota. Twin Metals has been trying to advance an underground mine in the area. The miner called the decision stunning and disappointing.
High battery metals prices, perhaps another lithium squeeze and geopolitical maneuvering will make 2023 an exciting year, Matt Fernley of Battery Metals Review says on the Kitco Roundtable.
A less rosy jobs report helped gold end the week higher, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris and Aura Minerals CEO Rodrigo Barbosa.
U.S. employment data from December showed a slight slowdown in hiring. The U.S. unemployment rate dropped to 3.5%, beating market consensus calls of 3.7% for December.
As of noon Eastern time Friday, spot gold was trading at the $1,860 an ounce level, a range the metal hadn't seen in the last seven months.
Barbosa's Aura Minerals is a mid-tier gold and copper production company focused on the development and operation of gold and base metal projects in the Americas.
The critical metal sector saw two big deals during the second last week of the year, noted Michael McCrae, mining audiences manager at Kitco
On Friday McCrae recorded Kitco Roundtable with John Feneck, Portfolio Manager and Founder of Feneck Consulting.
This week the world's largest miner, BHP, firmed up terms to acquire OZ Minerals. Deal has been upsized to $6.39 billion. For comparison, the Agnico-Pan American-Yamana deal was $4.8 billion. OZ Minerals has copper and nickel operations in Australia. Forbes reports that the acquisition could be BHP's biggest in over a decade. The deal follows the trend of big miners investing in the battery metal space: Sibanye-Stillwater buying ioneer and Keliber, Rio Tinto spending $2.4 billion on Serbian lithium project Jadar. Last year BHP Billiton lost the fight to acquire Noront Resources and its rich nickel project in Ontario.
Keeping with the battery metal theme, Lithium Americas is set to acquire Arena Minerals for $227 million. CEO Jonathon Evans said the transaction will consolidate development projects in Argentina. Lithium Americas plans to cut itself in two in 2023 with one company focusing on Latin America and the other on North America with the goal of unlocking value.
Roundtable also covered macro picture with Feneck predicting a hard landing due to the Federal Reserve's aggressive moves to fight inflation.
After Agnico Eagle Mines and Pan American Silver announced that they would acquire Yamana Gold in November, the Quebec miner is not expected to slow its pace.
On Friday Maple Gold Mines' Matthew Hornor made the remarks while recording Kitco Roundtable with mining audiences manager Michael McCrae and Kitco correspondent Paul Harris.
Maple Gold Mines (TSX.V: MGM) is a Canadian advanced exploration company in a 50/50 joint venture with Agnico Eagle Mines to jointly advance the district-scale Douay and Joutel gold projects located in the Abitibi Greenstone Gold Belt of Quebec, Canada.
With the $4.8 billion Yamana deal set to go through, Agnico Eagle Mines (AEM) is set to control all of Quebec-situated Canadian Malartic, Canada's largest gold mine. Hornor said Agnico is not going to slow.
"They need to have projects in every stage of the pipeline, and we represent for them what could ultimately be a very large, important camp," said Hornor.
Problems with the copper market were exemplified by two big production reports released this week, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
This week Goldman Sachs predicted prices could reach a record high of $11,000 a tonne within in a year. Copper is expected to be undersupplied in 2023 and "peak supply is now immovably fixed in mid-2024 ... generating deficits from that point." wrote the Goldman Sach analysts, according to reporting by Reuters.
Two big miners announced downward revisions for copper the same week as the Goldman report.
Glencore forecast copper production of 1.04 million tonnes in 2023, down from 1.06 million this year.
And today Anglo American announced in its production report that copper in 2023 is now 840-930kt instead of 910-1,020kt. The company said that copper production in 2023 and 2024 is "...impacted by lower grades across all operations, as well as an increase in ore hardness at Los Bronces, impacting throughput."
German car maker BMW said on Thursday it had invested in Jetti Resources, which has the technology extract copper from low grade material.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable.
McCrae also covered gold's big run in November.
Worries about inflation appear to be supplanted by fears about a recession, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris.
The Federal Reserve started raising interest rates in the summer to fight inflation. There are signs the medicine is taking hold. Consumer price inflation figure was lower than expected last month. Commodity prices have also been dropping, notably oil. Early this week oil hit its lowest level since January.
With worries about inflation receding, McCrae noted that financial commentators are now switching their concern to recession due to the Fed's rapid interest rate hikes.
Regrading mining news Harris discussed an investment by Jiangxi Copper, a Hong Kong-based investment company, into SolGold (LSE: SOLG; TSX: SOLG).
This month's jump in gold prices off the good inflation numbers along with woes in the crypto space provided a lift to junior gold miners, said mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable with Exploration Insights' Joe Mazumdar and Soar Financial's Kai Hoffmann at Deutsche Goldmesse in Frankfurt.
Podcast was sponsored by Snowline Gold.
Yamana Gold is set to be acquired by Pan American Silver and Agnico Eagle Mines after Gold Fields dropped out of the bidding.
Kitco correspondent Paul Harris, Soar Finanicial CEO Kai Hoffmann and guest Sam Ash, CEO of Bunker Hill Mining, discussed the week's mining and metal news on Kitco Roundtable.
This week Yamana Gold said it preferred a deal offered by Pan American Silver and Agnico Eagle Mines over a Gold Fields deal, which was announced in the spring. The competing bid from Agnico Eagle-Pan American was announced last week.
Gold Fields said it did not want to be drawn into a bidding war.
The metals sector ended the week on a positive note with a big bounce for most metals and news that Yamana attracted a new suitor.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable.
Gold prices surged nearly $50 on Friday as the latest U.S. jobs report clarified some of the Federal Reserve's mixed messages, and China signaled a possible easing of its Covid-Zero policy, wrote Kitco reporter Anna Golubova.
Gold has had a spectacular start to November after reporting the longest streak of monthly losses in more than five decades.
In mining news Yamana, which agreed to a takeover by Gold Fields in the spring, received a new bid from Agnico Eagle Mines and Pan American Silver.
Under the new offer Yamana would get $1 billion in cash and 153.5 million common shares of Pan American and approximately 36.1 million common shares of Agnico.
The Yamana board said the bid from Agnico and Pan American is superior, and Yamana supports the new bid.
Battery-metal producers warned of softer prices in this season's quarterlies, said mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris and Revival Gold CEO Hugh Agro.
This past week the United States Department Of Energy announced several grants to battery metal miners, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with Kitco correspondent Paul Harris.
The recently passed Inflation Reduction Act included a provision to fund energy transition. It incentivized companies to build battery metal manufacturing facilities in the U.S.
This past week notable announcements were Piedmont Lithium getting $141.7 million for a Tennessee lithium processing plant, Talon Metals getting $114 million for a battery minerals processing facility in North Dakota and Syrah Resources getting $220 million for an anode plant in Louisiana.
A string of economic data is throttling commodities
On Friday mining audiences manager Michael McCrae recorded Kitco Roundtable with correspondent Paul Harris.
On Thursday consumer price inflation report was released by the U.S. Bureau of Labor. Inflation increased by 0.4% in September which was higher than the forecasts predicted.
The inflation print along with last week's strong jobs number pushes the Fed to further tightening.
As if to put an exclamation point on it, Michigan Consumer Sentiment was released today. It ticked up in October.
The gold market is ending the week down nearly $90 from its October highs as investors renew their expectations of a very aggressive Federal Reserve into the year-end. The yellow metal dropped below the $1,650 an ounce level, with December Comex gold futures last trading at $1,647.80, down 1.74% on the day.
In mining news Cameco announced this week it is partnering to acquire Westinghouse Electric Company, one of the world’s largest nuclear services businesses.
Partner is Brookfield Renewable, which will own a 51% interest in Westinghouse and Cameco will own 49%.
Westinghouse services about half the nuclear power generation sector and is the original equipment manufacturer to more than half the global nuclear reactor fleet.
Costs for the two will be about $2.25 billion each.
A stronger than expected Friday jobs report halted market momentum, and the decision on Thacker Pass, America's next big lithium mine was pushed to the new year.
On Friday mining audiences manager Michael McCrae rounded up the metals and mining news for the week.
Steep interest rate hikes are hard on commodities and the markets, but the move is necessary, said Liberty Gold CEO Cal Everett.
On Friday Everett recorded Kitco Roundtable with mining audiences manager Michael McCrae and Kitco correspondent Paul Harris.
The Federal Reserve's rate hikes have been hard on investors. In early September the Fed increased its benchmark rate by 75 basis points, and another 1.25 percentage points is in the cards before year end. This week gold hit a 2.5 year low. The S&P 500 has dropped nearly a quarter year to date.
"I think they're absolutely doing the right thing by raising rates. Yes, it's punitive, but I think they're doing the right thing," said Everett.
Everett said the problem with inflation is that it is hard to tamp down once it gets entrenched.
"Once a market is fixated on a margin, it will fight to keep those margins."
Too much conservatism and a focus on capital discipline was a drag on the mining sector's big get together in September, said Kitco correspondent Paul Harris.
On Tuesday Harris recorded Kitco Roundtable with mining audiences manager Michael McCrae and VRIFY CEO Steve de Jong. Roundtable was filmed at Gold Forum Americas in Colorado Springs. The event began on Monday.
The forum started on a sour note with gold dropping to its lowest level in nearly 2.5 years on Friday. De Jong noted similarities to past pullbacks in the previous decade when junior companies had the option of switching to other sectors.
"What's fascinating about right now is that there is no sector to hide in," noted de Jong. "In the previous downturn, all of a sudden a bunch of mining companies...were starting really early stage cannabis companies or became blockchain companies. But right now there is no corner that you can hide in."
With the markets so uncertain, that has made the sector less risk averse. The proceedings were "boring."
"I would even go to so far to say it's more boring than last year's event when pretty much nobody came," said Harris, noting the event in 2021 where attendance was hampered by the pandemic. "It's almost like we're at the institute chartered accounting, because everybody's talking about capital discipline, balance sheets and share buybacks. Nobody's talking about building things, developing things. There's no excitement at all."
With gold dropping below $1,700 junior mining investors are scarce, notes Kitco correspondent Paul Harris.
On Friday Harris recorded Kitco Roundtable with mining audiences manager Michael McCrae.
Harris is at the 2022 Precious Metals Summit Beaver Creek. He noted the mood at this fall's kick-off show.
"It's quite doom and gloom. The running joke is 'spot the investor'," said Harris.
After an August shellacking, markets and commodities were keen to turn to the page, said Kitco's mining audience manager, Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris and Arnoud Star Busmann, president and CEO of Minehub Technologies.
On Friday gold rose as the dollar weakened, although prospects of more rate hikes from the U.S.
Federal Reserve are keep a lid on further gains. Spot gold hit a high of $1,729 today.
Bitcoin spiked above $21K, pushing the total crypto market cap back above $1 trillion.
Copper finished the week around $3.50 a pound range, and oil is trading in the mid $80s a barrel.
China, a major commodity importer, has been an anchor on metals. A deflating property bubble, COVID lockdowns, restrictions on lending and electricity shortages have all slowed China's economy.
Economists are looking ahead to the 20th National Congress of the Communist Party of China to be held mid-October, which will set the the country's economic agenda. Key finance roles in the country will also be filled. Bloomberg reports that a number of high-level functionaries should vacate government by early next year: Premier Li Keqiang, economic czar Liu He, central bank Governor Yi Gang, banking regulator Guo Shuqing and Finance Minister Liu Kun.
Harris rounded up the mining news, mentioning the new feasibility study announced by Skeena Resources and Sabina Gold & Silver going ahead on a new mine in Nunavut.
Decelerating economic growth was pitched as a solution for meeting the world's demand for metals, reported Kitco correspondent Paul Harris.
On Friday Harris recorded Kitco Roundtable with mining audiences manager Michael McCrae.
While energy transtion will require higher production levels of copper, lithium and nickel, metal production is generally declining. Reuters reported that top copper miner, Codelco, is set to produce significantly less copper. Over the next five years production is not expected to surpass 1.5 million tonnes. Traditionally Codelco has produced over 2 million tonnes annually. Some reasons for the decline are water shortages, declining asset grades and industrial action.
Harris reported from the Colombian Mining Association that Irene Velez, minister of mines and energy, suggested that the country must not ramp up production by building more mines. Rather, economies should decelerate.
Critics said that would impede energy transition and also hurt Colombia's economic growth.
Uranium miners traded higher this week after Japan announced plans to resume the country's nuclear program, noted Ur-Energy's CEO John Cash.
On Friday Cash recorded Kitco Roundtable with mining audiences manager Michael McCrae and Kitco correspondent Paul Harris.
Ur-Energy is an in-situ uranium company with operations in Wyoming, U.S. Since 2013 the company has produced and shipped about 2.6 million pounds U3O8 from its Lost Creek operation.
Japan will restart more idled nuclear plants and look at developing next-generation reactors, Prime Minister Fumio Kishida said on Wednesday, a major policy shift on nuclear energy a decade after the Fukushima disaster, reported Reuters.
Uarnium bellweather Cameco (TSX:CCO) benefitted, trading up 19% this week to end at $34 a share. Cash's company (TSE:URE) was up 15% for the week finishing at $1.60.
Near permanence and verification are the chief advantages to using reactive rocks for carbon sequestration, said CO2Lock's CEO Cooper Quinn.
On Friday Quinn recorded Kitco Roundtable with mining audiences manager Michael McCrae and Kitco correspondent Paul Harris.
CO2Lock is commercializing carbon capture and storage (CCS) using rocks that react and trap carbon dioxide. CO2Lock was formed this spring. It is a subsidiary of FPX Nickel (TSXV: FPX).
The minerals the company are using are brucite-rich serpentinized peridotite. CO2Lock claims the rocks have a high rate of reaction with CO2. The company is advancing in-situ and ex-situ methods for CCS.
The advantages to using rocks instead of other methods, such as planting trees or injecting CO2 into empty wells, is near permanence and verification. Quinn said CO2 capture using rocks means that the amount of carbon captured is highly verifiable. It also has near permanence. The carbon dioxide is bound within the mineralization.
The Consumer Price Index number released on Wednesday marked a turning point in the markets, argued Kitco's mining audiences manager Michael McCrae.
On Friday McCrae recorded Roundtable with Kitco correspondent Paul Harris and Exploration Insights editor Joe Mazumdar.
The Wednesday inflation news from the Labor Department shows that U.S. consumer prices were unchanged in July. The CPI was flat last month after advancing 1.3% in June. A drop in oil prices were credited. McCrae argued that the inflation narrative has weakened.
"It's just one month's data, but there was a sea change. Money came back to beaten up tech. The NASDAQ was up 1.51% for the week," said McCrae. "Beaten up copper hit a six-week high on hopes the Fed will stop tightening. It finished the week at the $3.70 pound level."
"Although gold was an inflation trade, it had been taken down in the past few months but also rose this week. Gold shot through 1800 on the CPI announcement and finished the week in the 1790s."
Companies are releasing their Q2s, and some are indicating that inflation has peaked.
Panelists also talked about Barrick's quarter, Gold Fields attempt to acquire Yamana Gold and BHP Billiton's play for Oz Minerals.
Lukas Lundin's passing was announced on Wednesday.
On Friday Lundin Gold CEO Ron Hochstein shared his rememberances with Kitco correspondent Paul Harris and mining audiences manager Michael McCrae on Kitco Roundtable.
Lundin Gold's flagship asset is its Fruta Del Norte Mine. In 2014 Lukas Lundin acquired Fruta Del Norte project for $240 million. The company (TSE: LUG), which Lukas chaired, now has a market cap just under $2 billion and is set to produce 420,000 ounces at around $900 a ounce.
Lukas Lundin led the development of many resource projects. He was a dealmaker and a mine builder.
"Over the past 40 years, Lukas has been a driving force behind the tremendous successes of companies within the Lundin Group. Lukas started his career in the international energy and mining sectors in the early 1980s working side-by-side with his father, the late Mr. Adolf H. Lundin," wrote the company in a news release announcing Lukas Lundin's passing.
"Under the leadership of Lukas and his brother Ian, and in close cooperation with the rest of the Lundin family, the Lundin Group has grown into an internationally recognized portfolio of energy and mining companies with operations spanning the globe. The eleven companies that comprise the Lundin Group today have a combined market capitalization in excess of USD 11 billion, directly employing more than 15,000 people and creating opportunities for tens of thousands more."
Lukas Lundin founded Lundin Mining together with his father in the mid-1990s for more than 25 years until he stepped down in May 2022. In his role as chair, Lukas oversaw Lundin Mining's development from an exploration-stage company into a global mid-tier producer with a strong copper focus and a portfolio of world-class assets.
Ford Motors announced seven battery-metal deals this week, noted Kitco correspondent Paul Harris.
On Friday Harris recorded Kitco Roundtable with mining audiences manager Michael McCrae and Cornish Metals CEO Richard Williams.
On Thursday the automaker announced it will buy lithium from ioneer, which is advancing its Rhyolite Ridge project in Nevada. Other deals Ford announced were with Compass Minerals, Syrah Resources and Rio Tinto.
Keeping with the battery metals theme, Williams updated the Roundtable on the company's South Crofty tin project in south west England.
Snowline Gold CEO Scott Berdahl singled out Victoria Gold going into operation as one of the biggest catalyst for the region's mining sector.
On Friday Berdahl recorded Kitco Roundtable with Kitco correspondent Paul Harris and mining audiences manager Michael McCrae.
Snowline Gold (CSE:SGD, OTCQB:SNWGF) is an exploration company operating in the Yukon. Snowline’s portfolio is spun out from a private, Yukon-based, family-owned prospecting company. The company's flagship, district-scale gold projects occupy the intersection of two mineral belts. Two significant greenfield gold discoveries in 2021, Jupiter and Valley, demonstrate presence of multiple deposit types and the emergence of a large, unexplored district, notes Snowline Gold in its investor presentation.
"Of course leading the way is Victoria Gold," said Berdahl. "They've done a great job of bringing an intrusion-related gold system, a Fort-Knox-style sort of mineralization, into production. And they're becoming an economic powerhouse in the territory, and that's great to see."
Victoria Gold's (TSX:VGCX) first pour from its Eagle Gold Mine was in 2019. The company estimates 2022 production will be between 165,000 and 190,000 ounces.
Under-investment, just-in-time manufacturing and environmental pressures are some the factors that resulted in the U.S. falling behind in securing its own domestic supply of critical metals, said Duncan Wood, vice president for strategy & new initiatives at the Wilson Center.
On Friday Wood recorded Kitco Roundtable with mining audiences manager Michael McCrae.
Wood was lead author for the The Mosaic Approach: a Multidimensional Strategy for
Strengthening America’s Critical Minerals Supply Chain. The Wilson Center, chartered by Congress in 1968 as the official memorial to President Woodrow Wilson, is an American non-partisan policy forum.
In the summer of 2021, the Wilson Center convened a Critical Minerals Working Group, made up of stakeholders from industry, academia and civil society, to examine the vulnerabilities that exist in the supply chain, and to discuss how the private sector and government can address them. Finding from the group were compiled in the report.
Carmaker Stellantis bought an 8% stake in direct lithium extraction company Vulcan Energy Resources for $52 million this week.
On Friday Kitco Roundtable's Michael McCrae sat down with the CEO of Golden Shield Resources, Leo Hathaway. Kitco correspondent Paul Harris and editor Neils Christensen recorded a segment from the Yukon, where they are participating in a mine tour.
Golden Shield Resources is a gold-exploration company focused on three, 100% owned, exploration projects in Guyana, South America.
Diamond Field Resources is pivoting to West African gold explorer, said CEO John McGloin.
On Friday McGloin recorded Kitco Roundable with mining audiences manager Michael McCrae.
Last year Diamond Fields (TSX.VDFR) announced it acquired Moydow Holdings, which has a portfolio of exploration and development projects across Africa, including the highly prospective Labola gold project in Burkina Faso.
In May Diamond Fields announced a drilling program for Labola. Diamond Fields joins other resource companies in the country, which has seen a mining renaissance due to regulatory changes.
Hard rock lithium mines can have much higher greenhouse gas emmissions compared to brines, said Mark Fellows, co-founder of and director at Skarn Associates.
On Friday Fellows recorded Kitco Roundtable podcast with correspondent Paul Harris and mininga adiences manager Michael McCrae.
Skarn is a UK-based consultancy that quantifies and benchmarks asset-level greenhouse gas emissions, energy intensity and water use across the mining sector.
Transportation, conversion and refining of hardrock lithium all lead to much higher greehouse gas output compared to brines.
Fellows said his company will be studying water usage at brines.
Brownfield projects have distinct advantages, said Vizsla Silver CEO Michael Konnert.
On Friday Konnert recorded Kitco Roundtable.
Vizsla Silver (TSX-V: VZLA, NYSE: VZLA) is advancing its flagship, 100%-owned Panuco silver-gold project located in Sinaloa, Mexico. The company said it has completed over 140,000 metres of drilling at Panuco leading to the discovery of several new high-grade veins. Vizsla is budgeting another 120,000 meters drilling in 2022 as it advances towards production.
"It's such an opportune platform to move into production simply because of the excellent infrastructure. We even have a past-producing mill and tailings," said Konnert. "Everything that you would need is on the property."
"Some mines take ten years to move into production or 20 years you to get through permitting. What have you is a past producing district with all that infrastructure, so it's a it's a huge opportunity for us to to move very rapidly."
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The Russia-Ukraine war revealed the vulnerability of the potash supply chain, said Gensource Potash CEO Mike Ferguson.
On Friday Ferguson recorded Kitco Roundtable with mining audiences manager Michael McCrae and Kitco correspondent Paul Harris.
Gensource is advancing a new technology, which Ferguson said is more modular and requires less capital. Gensource produces potash using a closed-loop method called selective extraction. A hot salt brine that is injected into ore bodies and then pumped out.
Russia and Belarus account for approximately 40 percent of global potash production and exports, noted Nutrien in its Q1 guidance. Due to sanctions and other restrictions, exports from the region are 20% lower this year compared to the year prior.
"The invasion of Ukraine by Russia really has shown a light on or exposed the lack of resiliency in the supply chain for for potash," said Ferguson, noting that high concentration within the industry and older mines have also contributed.
India announced that it was increasing subsidies for fertilizers due to prices rises for the commodity.
Gold is holding up relatively well compared to everything else, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with Kitco correspondent Paul Harris after a tumultuous week for markets and metals.
On Wednesday the Fed announced a 50-basis point hike, the biggest in 22 years. The U.S. dollar and U.S. Treasury yields all soared this week, while there was carnage in the markets.
NASDAQ composite is down 22% year to date, while the S&P is down 13%.
Bitcoin is also down 23% since Dec. 31.
Gold hasn't been all that bad. The metal is still up about $80 on the year.
Winners have been the senior gold miners. Barrick and Newmont are both up 20% year to date. GDXJ just 2%.
The week culminated in Friday job's report. The U.S. Bureau of Labor Statistics said 428,000 jobs were created in April. The data beat expectations. Economists were forecasting job gains of around 390,000.
As of recording Roundtable June gold futures last traded at $1,887.20 an ounce.
Kitco Roundtable was sponsored by Libero Copper
Gold dropped sharply in April due to a rise in U.S. Treasury yields and a resilient U.S. dollar, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with Kitco correspondent Paul Harris.
Copper was off about 5% for the week, noted McCrae. Concerns about the pandemic and an industrial slowdown in China weighed. In its earnings Caterpillar warned that demand in China will be weak, similar to what was experienced in 2019 during the start of the pandemic.
The Chinese government did announce an aggressive stimulus to support the economy.
Podcast sponsor was Libero Copper.
While many metal prices have rocketed, mining equities have mostly under-performed, noted Queen's Road Capital CEO Warren Gilman.
On Friday Gilman recorded a podcast with Kitco correspondent Paul Harris and mining audiences manager Michael McCrae.
Queen's Road Capital (TSX:QRC.V) finances miners. The company focuses on convertible debt securities. Some investments are NexGen Energy, Adriatic Metals and Los Andes Copper.
Metal prices are up due to supply disruptions and the pandemic, but Gilman said companies are still under-valued.
"It's generally harder to deploy capital in a equity bull market, but this is a different equity bull market," said Gilman. "Commodity prices are doing very, very well. Equities aren't quite keeping pace. That's particularly true in the North American gold space."
Over the past year, the gold price is up 9.8% but the VanEck Junior Gold Miners has lost 8.21% over the same time period.
Gilman said his company is not focused on any particular commodity.
"I think being commodity agnostics agnostic helps us to find opportunities in out of focus sectors," said Gilman. "We are focused on debt securities. So we're not direct equity investors normally. We have that protection of a debt position in the company's balance sheet. We go to relatively safe jurisdictions in the mining sector, and we try to diversify the portfolio to your point amongst different commodities, amongst different projects and amongst different geographies."
Kitco Roundtable was sponsored by Libero Copper.
Mergers and acquisitions are creating their own momentum, said Tectonic Metals' CEO Tony Reda.
On Friday Kitco recorded Kitco Roundtable.
Tectonic Metals (CVE:TECT) is a mineral exploration company focused on North America. Assets include the Tibbs project, which hosts three new Tectonic drill discoveries in the Goodpaster District and is 35 kilometres east of the Pogo Mine.
Before heading Tectonic, Reda who was part of the team that advanced Kaminak's Coffee project in the Yukon. The company was eventually bought by Goldcorp or C$520 million in 2016.
Majors have been showing interest in northwest America. In 2021 Newcrest Mining acquired Pretium for $2.8 billion. In the same year Newmont acquired GT Gold for $393 million. Both acquired companies operated in B.C.'s Golden Triangle. In the Yukon, Teck invested in Fireweed Zinc in 2019, and Rio Tinto invested in Western Copper and Gold in 2021.
"You know, success breeds more success, and that's not just on the exploration front. It's also on the permitting front, the political front, the First Nations front," said Reda.
"People go where there's opportunity, where there's a flight to safety—working in your own backyard working in jurisdictions where there is established law and it's predictable and stable."
News this week that Ottawa plans to spend C$3.8 billion ($3.02 billion) to support battery metals was welcomed by miners.
On Friday mining audiences manager Michael McCrae hosted Kitco Roundtable.
The Canadian government announced the funding it its budget. Funds would go to mineral surveying, processing and recycling, as well as tax credits for digging new mines and subsidies for infrastructure. Regulatory oversight, however, would mostly stay the same.
"$3.8 billion for minerals and metals, and that’s not including other budget items, like the $15B Clean Growth Fund, a piece of which will doubtless support critical minerals. A time for celebrating Canadian #mining and its role in #climateaction," tweeted Pierre Gratton, President and CEO of the Mining Association of Canada, supporting the measure.
Sponsor of Kitco Roundtable was Golden Minerals.
Energy transition is going to require a lot of copper, but miners are still cautious, said Kitco correspondent Paul Harris.
On Friday Harris recorded Kitco Roundtable with mining audiences manager Michael McCrae and CEO and co-founder of Enduro Metals, Cole Evans. Enduro Metals (TSXV: ENDR) is an exploration company focused on British Columbia’s Golden Triangle.
In late March Harris covered the CRU World Copper Conference 2022 in Santiago, Chile.
According to CRU presentations at the show, there is a six-million tonne per year supply deficit for copper. The deficit will require about $100 billion of investment, but miners are mostly limiting risk by developing brownfield sites, areas that were previously mined.
"Mining companies are pretty much focused on brownfield projects where they perhaps already got permitting," said Harris. "They've already got relationships with communities and local government. Companies do not want to engage in greenfield developments at the moment. I guess the feeling is [greenfields] are just high-risk from a permitting point of view, from a cost view and from a cost overrun point of view."
Cole said there will be an eventual turn to greenfields development.
"There's only a finite amount of brownfields projects," said Cole. "I think you're going to start to see a transition."
Kitco Roundtable is sponsored by Golden Minerals.
Last week Barrick Gold (TSX: ABX) announced that it was restarting the Reko Diq project in Pakistan.
Kitco correspondent Paul Harris and mining audiences manager Michael McCrae discussed the impact on the senior miner.
Podcast was sponsored by Golden Minerals (TSX and NYSE American: AUMN).
Investors want pre-production juniors to merge to attract different and bigger investors into their stories, said Kitco Roundtable podcast special guest George Salamis, president and CEO of Integra Resources.
Having recently participated in the BMO Metals and Mining conference, Salamis said a common theme was that traditional investors are tired of being the only check writers to pre-development companies. “They are saying that by consolidating to create a bigger company, perhaps you attract a bigger investor who can write checks alongside your existing investors. There is a bit of fatigue out there,” said Salamis.
The Roundtable looks at why nickel stopped trading on the London Metal Exchange and why development of Simandou--one of the largest untapped iron ore deposits in the world -- was put on hold.
Kitco correspondent Paul Harris and mining audiences manager Michael McCrae recorded the podcast on Friday.
During one of the most serious geopolitical events in decades, gold performed, said Triple Flag Precious Metal's CEO and founder, Shaun Usmar.
On Friday Usmar recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and Kitco correspondent Paul Harris.
Triple Flag (TSX:TFPM,) is a gold-focused streaming and royalty company. The panel talked about gold's rise after Russia invaded Ukraine. When the news broke a week ago Wednesday, spot gold crested $1,940 an ounce hitting a 20-month high while Bitcoin lost about 7%.
"All that rhetoric around Bitcoin and crypto being a new store of digital gold...in a moment like this gold really does have that safe-haven status," said Usmar.
Spot gold hit a 20-month high, cresting $1,940 an ounce on Wednesday, when news of the Russian invasion of Ukraine broke.
On Firday Mining Audiences and Data Intelligence Manager Michael McCrae discussed the week's events with Kitco correspondent Paul Harris.
In contrast to gold, Bitcoin dropped, losing about 7% for the day and trading under $35,000.
While nickel demand is growing due to energy transition, miners are hesitant to jump in due to an incomplete supply chain, said Lyle Trytten, development manager at Giga Metals and president of Trytten Consulting.
On Friday Trytten recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and Kitco correspondent Paul Harris. Electric vehicle adoption is quickening, and nickel is a key component to make some types of lithium-ion batteries.
While nickel traded at a decade-high this year, Trytten said the metal price works to economically build a mine, but there is a missing processing component.
"[Miners] haven't jumped in because there isn't a high degree of trust that all the pieces will be there. It's equally about the processing. There no capacity in Canada to actually treat and process the raw materials, so the whole midstream processing sector needs to grow."
Safe-haven demand is pushing gold prices to a three-month high but will rising geopolitical tensions create a sustainable bid in the precious metal.
On Monday editor Neils Christensen recorded a podcast with Phillip Streible, chief market strategist at Blue Line Futures. The guest was John Reade, chief market strategist of the World Gold Council. The three talked about the health of the global marketplace.
Yukon prospector Shawn Ryan said smaller mines are possible in Newfoundland due to the good infrastructure.
On Friday Ryan recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and Kitco correspondent Paul Harris.
Ryan is behind some of the most successful discoveries in the Yukon, such as the Coffee project, which was eventually picked up by Goldcorp for over C$520 million. Ryan is currently chief technical advisor for White Gold, as well as technical advisor at GroundTruth Exploration, a 200-person strong exploration firm in the Yukon.
"I'm used to working in the Yukon where we're remote, but here remote is 10 miles off the road and 10 miles from a high-powered transmission line," said Ryan.
So it's kind of a dream for me, and as a prospector I don't have to find 2 to 3 million ounces to put a mine into production [in Newfoundland]. We're starting to see is these maritime guys put 600,000, 700,000 ounce into production."
While gold and silver are trapped in a range, one market analyst said investors should look at other commodities with a lot more potential in 2022.
Monday, in the latest Kitco News commodity podcast with Neils Christensen, editor of Kitco News, and Phillip Streible, chief market strategist at Blue Line Futures, Paul Robinson, managing director of CRU, presented his top five commodity picks for the year.
Robinson said that his U.K.-based research firm sees fertilizer as the top-performing commodity this year. This comes after prices rallied more than 50% last year. He added that rising food prices are driving crop demand, which is driving the need for fertilizers. He noted that in this space, Canadian potash companies should do well in this environment.
While there may be an easing off of copper prices in the short term due to big copper mines coming online, economist Patricia Mohr said demand from energy transition is going to overwhelm in the medium- to long-term and drive prices higher.
On Friday Mohr recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and Kitco correspondent Paul Harris. Mohr was formerly with Scotiabank.
Teck’s QB2 project is expected to begin by late 2022. Ivanhoe’s Kamoa-Kakula operation started in 2021 and is ramping up. Kamoa-Kakula is expected to hit peak annual copper production of more than 800,000 tonnes this decade.
Despite the new supply, electric vehicles and renewable energy plants require a lot of copper, and existing copper mines are ageing.
"[After] 2025 you're going to see a global drop in supply, which will be very frightening because global demand with EV sales is moving ever higher. [Demand] is going to be extremely strong," said Mohr.
EDITOR'S NOTE: Modifed QB2 and Kamoa-Kakula to make start dates more precise.
With inflation running hot around the world, gold prices should be well over $2,000, according to Nitesh Shah, director of commodity research at WisdomTree.
Monday, in the latest Kitco News commodity podcast with Neils Christensen, editor of Kitco News, and Phillip Streible, chief market strategist at Blue Line Futures, Shah noted that consumer inflation is currently at 7%, its highest level in 40 years, at the same time European inflation has risen to 5%.
Silver favors investors with larger prices swings relative to gold, said James Anderson, CEO of Guanajuato Silver.
On Friday Anderson recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and Kitco correspondent Paul Harris.
Guanajuato Silver (GSilver) is reactivating past producing silver and gold mines near the city of Guanajuato, Mexico. The company currently has two mines are El Cubo, which is currently producing, and El Pinquico, which is advancing to restart.
"A lot of the investors I've spoken to often say that they make more money [investing] in silver rather than gold, because it has much greater volatility, greater beta. So when silver moves, you can really go to the moon," said Anderson.
"But obviously if you come in at the right point."
The gold market still has a path back to $2,000 an ounce even as the Federal Reserve looks to tighten its monetary policy this year, according to one market strategist.
In Kitco News's inaugural gold market podcast, George Milling-Stanley, chief market strategist at State Streat Global Advisors, said that although the Federal Reserve is looking at raising interest rates with the potential for three or four rate hikes this year, high inflation pressure means that real yields will remain in negative territory.
The shortage of battery metals is driving up the costs of electric vehicles to the point where car ownership may transition to various types of rental models, said Matt Fernley, editor of Battery Materials Review and Head of Research for Westbeck Capital’s Volta Energy Transition fund.
On Friday Fernley recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Editor Neils Christensen and Kitco correspondent Paul Harris.
Demand for electric vehicles is up sharply due to a big worldwide regulatory push and swiftly changing consumer sentiment. However, battery metals costs are rising quickly due to supply disruptions and just not enough mines online to meet the rising demand. This week nickel hit a 10-year high.
"I think there is a risk that EV prices will have to stay outside the mass market," said Fernley "And that then raises the question: how do you sell EVs if they're double the price of internal combustion engines.
"Perhaps the auto companies will have to look at different ownership structures. So one structure that's been very successful in China is battery as a service where the OEM effectively sells the car, but they don't sell the battery, and the user—the owner of the car—rents the battery of the company," said Fernley, who points out this arrangement has advantages for battery recycling.
Other means of getting EVs to consumers are fleet sales and contracting "...whereby the end consumer, like you and me, doesn't actually own the car.
LINKS MENTIONED DURING THE PODCAST
Great Bear acquistion disclosures
How High Could Lithium Go by Matt Fernley
EDITOR'S NOTE: we are changing the podcast format. Neils Christensen will be starting his own macro-focused podcast. Paul Harris and Michael McCrae will concentrate on mining. Both podcasts will be published in this feed in the coming weeks.
DISCLOSURE NOTE: Podcast guest Matt Fernley mentioned Atlantic Lithium during the podcast. He holds stock in the company.
Red hot nickel may be coming back to earth, according to Reuters.
On Saturday Michael McCrae recorded a solo Kitco Roundtable looking at the past week's metal and mining news.
On Friday nickel prices jumped to their highest since 2011 on as a supply deficit ate into stockpiles and electric vehicles gain wider acceptance. Benchmark nickel on the London Metal Exchange (LME) was $22,400 a tonne.
However, supply should be ramping up. Early last year Norilsk Nickel, the largest miner of the metal, said that two of its mines flooded, which crimped production. The miner said the issues is fixed and production is set to rise. The Russian miner is set to produce 205,000 to 215,000 tonnes of nickel this year compared with 190,000 to 200,000 tonnes last year.
Copper prices are heading up due to increased demand from energy transition and declining grades at existing mines, said Nolan Peterson, CEO of World Copper.
On Friday Peterson recorded Kitco Roundtable with Kitco correspondent Paul Harris and Mining Audiences Manager Michael McCrae. World Copper is a copper-focused exploration company operating within Chile.
"The average head grade of copper mines worldwide has dropped from about 1.6% to below 1% now," said Peterson. "That's been a steady decline over the last 30 years. [It] doesn't seem like a lot when you think about it, but you're basically moving twice as much material now."
This week Kitco Roundtable panelists Michael McCrae, Paul Harris and Neils Christensen picked their top news story of the year, as well as emerging trends in 2022.
McCrae is Mining Audiences Manager, Harris is a Kitco correspondent and Christensen is a Kitco editor.
McCrae chose the large automakers investing electric vehicles as mining's top headline, due to a firm commitment to battery metals. Christensen said meme stocks and emerging silver were most impactful to him. Looking at top gold deals, Harris argued that Newcrest buying Pretium had the biggest implication for the precious metal space.
The build out of hydroelectric power in the northwestern B.C. is fundamentally changing mining and exploration in the region, said Walter Coles Jr., CEO and president of Skeena Resources (TSX:SKE).
On Friday Coles recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Editor Neils Christensen and Kitco correspondent Paul Harris. Skeena is an exploration company focused on northwestern B.C., the Golden Triangle. The region has seen big developments, recently Newcrest's $2.8 billion Pretium purchase in November.
Coles said that mine costs and environmental pressures are seeing rapid changes with miners being able to hook up to hydropower grids and give up on diesel.
"Tt's a massive paradigm shift on the cost side to be able to plug into cheap, clean hydro power, as opposed to using fossil fuels," said Coles.
While big deals in the gold space are getting done, the battery metal space is seeing more aggressive mergers and acquisitions, noted panelist Mining Audiences Manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with Kitco correspondent Paul Harris.
For much of 2021 Wyloo Metals and BHP Billiton were in a bidding war for Noront Resources, which is advancing its Eagle’s Nest nickel, copper, platinum and palladium deposit located in Ontario. In October Sibanye-Stillwater beat several bidders and paid $1.0 billion for both the Santa Rita nickel mine and the Serrote copper mine in Brazil.
The gold space has seen less competition. The year's biggest deal, Agnico Eagle-Kirkland Lake Gold, lacked a premium or other suitors.
The overhang of expensive deals from the last decade weighs on gold miners. McCrae also said battery metal producers are paying more since they clearly see a lack of supply in EV space.
While carbon credits have been around about 30 years, demand is finally surging, said Brett Heath, chairman of newly-formed Carbon Neutral Royalty.
On Friday Heath recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and editor Neils Christensen. Heath is also CEO of Metalla Royalty & Streaming.
Demand for carbon credits is estimated to increase by 15x by 2030 and by 100X by 2050, according to data compiled by Carbon Neutral Royalty.
"Carbon credits have been around since the late nineties, so they're not a new invention, but it's the first time we've ever seen this global mass adoption," said Heath.
Technology giants dwarf mining giants, but that can also benefit investors, said Yamana Gold's executive chairman, Peter Marrone.
On Friday Marrone recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Editor Neils Christensen and Kitco correspondent Paul Harris.
The largest gold miner, Newmont, has a market capitalization of $44 billion, compared to Apple's $2.57 trillion valuation. Fractionally, Newmont is 1.7% the size of Apple.
Tech companies have also been attracting more investors. The Nasdaq Composite is up 22% year to date. The VanEck Junior Gold Miners ETF is down by nearly the same amount over the same period.
Give the gold sector time, said Marrone.
"Vacuums have to get filled. The broader investment community has to say: 'Where do I go to put my money?' And if the broader market is trading at 13, 14, 15 times cashflow and precious metals companies are trading at four to five times cashflow, I think it'll find a home. That's where the money will go," said Marrone.
When favor returns to precious metal companies, any cash turned on the sector will have out sized impact due to the gold sector's relatively small size, said Marrone.
"In some respects, I believe what's holding the sector back .... is relevance. Is it relevant to the broader investment community when everything else is doing well? But when everything else is so big by comparison, that's also the positive."
There has been a succession of mergers and acquistions in the gold space, said mining audiences manager Michael McCrae.
On Friday McCrae recorded a podcast with editor Neils Christensen and Kitco correspondent Paul Harris.
This past week it was announced that Evolution Mining would buy Glencore's Ernest Henry Mining copper-gold mine in Queensland, Australia, for A$1 billion ($730 million).
Earlier this month top ten Australian miner Newcrest picked up Pretium for $2.8 billion. In October there was the Agnico Eagle-Kirkland Lake tie up. If the merger is approved, Agnico Eagle will be a number three gold miner.
Precious metals look good due to the central banks finding themselves stuck "between a rock and hard place," said Gwen Preston, who runs the Resource Maven.
On Friday Preston recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and Kitco correspondent Paul Harris.
Preston was commenting on Bank of England, which decided not to raise rates on Thursday. The bank had made hawkish statements in the face of wage and inflation pressures.
"I think people are starting to realize that they're really stuck. We still need this liquidity in the global economy to try to keep things going otherwise the gears are just going to grind to a halt," said Preston.
"It just underlines what I was saying: that they're stuck between a rock and hard place."
The gold miners have not done themselves any favors with hiking dividends instead of acquiring more assets, said mining legend and entrepreneur Ian Telfer.
On Friday Telfer recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and Kitco correspondent Paul Harris.
Telfer has had a storied mining career and was foundational in the creation of Goldcorp and Wheaton Precious Metals.
Telfer explained why he didn't favor buybacks or dividends by the gold miners.
"The majority of the share buyers are not looking for dividends. They're looking for an increase in the price of gold. I think [the gold miners] should be using that cash to grow their assets and find more reserves and get larger," said Telfer. "The average share buyer I don't think cares about dividends in a gold stock."
Panelists on the Roundtable contrasted the weak mergers and acquisition activity in the gold space with Sibanye-Stillwater's buying spree in the battery metals space.
This past week Sibanye-Stillwater was top bidder for Santa Rita nickel mine and the Serrote copper mine in Brazil paying $1.0 billion. In September Sibanye announced that it would be spending $490 million to partner with ioneer on its Rhyolite Ridge Lithium-boron project located in Nevada, USA. Earlier in the year Sibanye acquired Eramet’s Sandouville nickel processing facilities in France for $76.82 million, and Sibanye invested $35.46 million in Keliber, a lithium project in Finland.
Neal Froneman is CEO of Sibanye-Stillwater.
"I love his aggression. One of my comments on our industry is that not enough people are doing mergers and acquisitions to grow their companies. Size matters, especially if want to attract larger investors," said Telfer
"My observation of the mining industry--and especially the gold mining industry--is that companies are most successful run by one entrepreneur with one set of eyes and one vision," said Telfer, noting Robert Friedland and Lucas Lundin as examples.
Big boards can slow a company's growth "... and the energy tends to go out of it."
"Neals doesn't have that problem. He's had such success. His board lets him go where he wants to go and it's working perfectly for him."
Innovation is relentless in the electric vehicle space, particularly around material substitution due to worries about reliability of supply, but original equipment manufacturers need time to adjust to new processes, said Dr. Soroush Nazarpour, founder and CEO of NanoXplore (TSE:GRA).
On Friday Nazarpour recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
NanoXplore is a graphene company, a manufacturer and supplier of graphene powder for use in industrial markets with applications in transportation, packaging, pipe, film, electronics. The company is up 186% to $7.88 a share in the past year.
This week Tesla said it is changing the battery cell chemistry that it uses in its standard range vehicles, opting for lithium-iron-phosphate that will cut material cost.
Substitution is a concern for battery metal producers, but Nazarpour explains that it takes time for OEMs to adjust.
"It's a long process. Normally it takes two to three years for OEMs to be able to change a material," he said, explaining that new materials have to be validated and the supply chain needs to be tested.
Nazarpour illustrates with his own company, which he said has sizable market share.
"It's a good thing and a bad thing because if we can not supply, there's no second player in the market that can bring confidence to an OEM."
Never mind the current rush into electric vehicles, coming regulations are going to drastically increase EV adoption and mineral demand, said Matt Watson, founder of Precious Metals Commodity Management.
On Friday Watson recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and Kitco correspondent Paul Harris.
In the seven months up to July, global sales of electric vehicles were up 150% to just over 3 million units, compared to the same period in 2020, with about 1.3 million sold in China, according to the consultancy Rho Motion and reported by Reuters. And in Norway sales of EVs have been so successful, trends point to 100% market share by spring at the expense of internal combustion engine sales.
Consequently battery metals have been on a tear. Lithium is up 159% for the year based on Benchmark Lithium Price Tracker.
Watson estimates that EV penetration currently sits between 4% to 5%.
"I think the message is: you haven't seen anything yet. By 2030 to hit the zero emission mandates that have been put into place by different governments, 25% penetration is needed," said Watson.
"And then jumping ahead to 2035, then the numbers get really silly. Then you need 62% of the global feet transitioned to EVs."
"In terms of total aggregate mineral demand [to build these EVs], it's just outlandish."
A second bad jobs report along with spiking energy prices is hinting at stagflation, said Junior Miner Junky editor David Erfle.
On Friday Erfle recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
The job's report for September was dismal with only 194,000 jobs added last month. The forecast was for a much higher number, ranging from 450,000 to 500,000 new jobs. The preceding August jobs report was also a disappointment.
While the jobs report could point to a soft economy, some commodity prices are spiking, notably oil. Reuters reported that Brent crude hit $83.47 a barrel on Wednesday, the highest price for oil since October 2018. A soft economy and inflation are markers of stagflation, which harkens back to the oil shocks of the '70s.
"Get out your bell bottoms and your disco records, because that word 'stagflation' is coming back," said Erfle.
Some advanced computers require super-cooling, and that's where helium plays its role, said Desert Mountain Energy's CEO Robert Rohlfing.
On Friday Rohlfing recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
Mining companies have been investing in lithium, copper and nickel projects to meet growing need for lithium-ion battery materials.
Some oil and gas companies are pivoting to helium extraction. There is a growing need for helium, which cools computationally intensive hardware needed for machine learning, which is finding its way into transportation and smart-driving systems.
Rohlfing's company is up 61% year to date.
With travel curtailed due to the pandemic, consumers are shifting spending to material luxury items, which favors diamonds, said Paul Zimnisky, industry analyst.
Early last monthy Zimnisky recorded Kitco Roundtable podcast with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
"If you look at Signet Jewelers--the largest jewelry company in the U.S.--they've raised sales guidance three times this year. I've never seen anything like this before," said Zimnisky.
[EDITORS'S NOTE: Interview appears to have not run due to technical issues. We are reprising the episode with some edits.]
There is still a lot ground left to explore and find big new discoveries, said the CEO of Blackwolf Copper and Gold (CVE:BWCG), Rob McLeod.
On Friday McLeod recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
There is a concern that precious metal supply may be constrained in the future without any big new gold projects. McLeod said there are still vast areas that are under-explored. Glaciers are receding, uncovering prospective ground. Technology is also helping find potential new targets.
"Are there still world-class discoveries can be made? Absolutely!," said McLeod. "Maybe you can look back in a hundred years and say... we're at peak discovery for new world-class deposits, but I think...there's still going to be a lot more that will be discovered."
The gold sector suffers from a lack of quality projects, said Banyan Gold's CEO Tara Christie.
On Friday Christie recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
Year-to-date the VanEck Junior Gold Miners ETF is off 30% to $17.57. Harris said too many gold companies make the sector harder for investors to navigate. Barrick Gold CEO Mark Bristow wants to see more sector consolidation, according to Reuters. Still, gold prices have been good, and producers are cashed up for acquisitions.
"I think the bigger problem is lack of quality projects. We need new projects, not just regurgitating old projects," said Christie. "The ones that have marginal projects--why would majors want to buy them if the price of gold goes down?"
Banyan Gold is a junior focused on the Yukon. Its 9,230 ha Aurex-McQuesten Property lies in close proximity to both Victoria Gold's Eagle Project and Alexco Resource's Keno Hill Silver District.
Significant milestones for Equinox Gold (TSX:EQX) is production coming online in Brazil and Ontario, said president Greg Smith.
On Friday Smith recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
Equinox Gold is forecasting about 600,000 ounces this year with plans to grow to one million ounces annually.
Smith said key milestones will be a mine at Santa Luz with the first pour scheduled for the first quarter of 2022. Santa Luz is situated in Brazil. Equinox is also advancing its Greenstone project in Ontario. A mine at Greenstone would have anaverage annual production of more than 240,000 ounces attributable to Equinox.
The gold miners and juniors are trading at significant lows despite the yellow metal pushing through $1,800 this week, noted Greg Johnson, CEO of Metallic Minerals and chair of the Metallic Group.
On Friday Johnson recorded Kitco Roundtable podcast with Mining Audiences Manager Michael McCrae and Kitco correspondent Paul Harris. Gold and gold equities were near an all-time high a year ago, noted Johnson.
Since then prices have slid with the VanEck Vectors Junior Gold Miners down 28%.
"The juniors tend to correct more. They also go up more during the upper legs of the cycle," said Johnson. "We're coming out of a summer...a lot of people checked out. I'm optimistic that we may see better markets in September. The [past] 12 months is quite a healthy correction, and it's presented a real investment opportunity.
The podcast also referenced the Financial Review's coverage of Kuniko.
Gold has risen smartly after it dropped sharply at the start of the week.
On Friday Stephen Soock at Stifel recorded Kitco Roundtable podcast with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
Panelists discussed the flash crash, the Fed's pull on the gold market and earnings from Barrick Gold.
Processing rare earth ore has a huge hurdle for most projects, said the CEO and president of Geomega Resource, Kiril Mugerman.
On Friday Mugerman recorded Kitco Roundtable podcast with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
Geomega is investing in recycling processes to recover rare earth waste. Mugerman was asked why it is so difficult to build a rare earth mine.
"Separating [rare earth] is very hard. There is uranium and thorium included, so you need to get rid of those. You're dealing with fairly low grades. If you want to produce something you have to produce huge amounts of waste [with] very large tailings facilities," said Mugerman.
Although conditions have improved, the mining sector remains undervalued and struggles to attract capital from generalist investors.
However, Chris Donaldson, CEO of Outback Goldfields, said that he is optimistic that attention will return to the mining sector. He added that investors won't be able to ignore the industry when gold prices push back above $2,000 an ounce.
"We're just waiting for this action to occur, and I think it's coming here real soon. In the back half of this year, we'll finally see some movement," he said.
Donaldson's bullish outlook on gold comes after Federal Reserve Chair Jerome Powell breathed new life into the precious metal after he said the U.S. economy has not reached "substantial further progress" to warrant a slowdown of its bond purchasing program.
Gold prices pushed to a six-week high following Powell's comments before seeing some technical selling pressure into the weekend.
Before becoming the CEO of Outback GoldFields, Donaldson was the director of corporate development with Western Copper and Gold, which is developing its Casino copper and gold project in Canada's Yukon Territory.
Donaldson said that the most significant difference between the Yukon and Australia is the climate. He noted that the weather in the Yukon provides unique challenges for junior explorers.
"In the Yukon, you busted your butt for three or four months trying to get all your drilling and then you wait six, nine months for results. So, there are these big gaps," he said. "Whereas in Australia, I'm happy to have year-round drilling. We have easy access to the property. We don't have to fly in and out; our guys, go home for lunch."
As for attracting capital in the mining sector, Donaldson said that whether it's in the Yukon or Australia, many of the criteria are the same. Quoting the mantra of Outback's chairman Craig Perry, Donaldson said that it comes down to "the size of the prize and what is the cost of the test."
Donaldson said that he was attracted to Outback because of its location in Australia's historic Victorian Goldfields. The project is located near Kirkland Lake Gold's Fosterville Mine.
"Eighty million ounces that have been produced there, and geologists believe that with new techniques, there's probably another 80 million yet to be discovered," he said. "I'm a big believer in the Yukon too, so don't get me wrong, but, uh, we're in a more established area, and I think the chance for discovery is higher."
Elevated demand for battery materials due to energy transition makes this period a super cycle, said Battery Materials Review Editor Matt Fernley.
On Friday Fernley recorded Kitco Roundtable podcast with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
Battery materials like copper, nickel and lithium have had big price run ups in 2021.
"We are in a super cycle. I define a super cycle where you see a structural demand event tied to a situation where you have tight supply, and this is the very definition of a super cycle," said Fernley.
While governments have been announcing ambitious green-energy initiatives, the private sector has been matching with its own spending, said Ion Energy CEO Ali Haji.
On Friday Haji recorded Kitco Roundtable podcast with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
Ion Energy (CVE:ION) is advancing a lithium project in Mongolia.
Haji noted that the Biden administration has plans for energy transitioning spending in the billions. Haji also pointed to GM's June announcement that it was increasing spending on electric and autonomous research.
"We've also seen the private [sector investments], such as GM spending $35 billion. That's a significant number, and they're planning to spend that before 2025. So you're talking about four years' worth of R&D--not production, not development, not retrofitting factories--but purely R&D."
With the concentration of nickel in countries such as New Caledonia and Philippines, the nickel supply faces jurisdictional risk, said FPX Nickel's CEO Martin Turenne.
On Friday Turenne recorded Kitco Roundtable podcast with Mining Audiences Manager Michael McCrae, Kitco correspondent Paul Harris and editor Neils Christensen.
FPX Nickel (TSX-V:FPX) is a Vancouver-based junior nickel mining company developing the large-scale Decar Nickel District in central British Columbia.
The French protectorate of New Caledonia has been facing political strife as an independence vote looms later this year. Early this century the region's nickel reserves were estimated at 11% of the world's total. The Philippines are also a significant nickel producer but have had a bumpy track record with managing its mining regulations, making the country hard to invest in.
Turenne said Indonesia is the Saudi Arabia of nickel due to the amount of supply coming online in that country, but much of the power for the mines in those countries will be from dirty sources, such as coal and diesel.
Nickel has become a key metal for electric vehicles and demand is forecast to climb significantly higher.
"You have a lot of geopolitical risks that's baked into a nickel supply. Some of the major nickel producers in the world like Canada and Australia...are relatively stable...and tend to benefit when there's geopolitical disruptions," said Turenne.
When assessing his junior picks, John Feneck said jurisdictional risk is becoming more important.
On the Friday Feneck recorded Kitco Roundtable with Michael McCrae, mining audiences manager at Kitco. Feneck is president of Feneck Consulting, which helps small and mid-cap resource companies raise brand awareness, as well as providing advice to institutions and individual investors on commodity investments.
Feneck noted the tax troubles silver miners are facing in Mexico, as well as the presidential election in Peru. Pedro Castillo looks to be holding the edge in the unresolved election. According to Reuters the 51-year-old schoolteacher has vowed to redistribute wealth and rewrite the constitution.
"Jurisdiction is becoming more important, so we're trying to avoid certain areas unless it's just too compelling," said Feneck.
Great sums ready to be unlocked and flow into mining as long as environmental social governance (ESG) issues are addressed, said the founder of Digbee, Jamie Strauss.
On Friday Strauss recorded Kitco Roundtable podcast with correspondent Paul Harris, Mining Audiences Manager Michael McCrae and editor Neils Christensen.
On its website, Digbee describes itself as a on-demand data, research and ESG platform for the mining industry. We offer a free database of in-development and producing mines, objective and accredited peer reviews of mining studies, and ESG disclosure for mining companies.
Socially conscious investors use ESG to screen potential investments. Strauss said there are a lot of ESG and impact investing funds who are interested in mining. The resource sector is fundamental to energy transition. However, the ESG investors have not fully commited to mining.
"They all say to me, 'give us a means to credibly track ESG within these companies,'" said Strauss.
Mining has a small market cap relative to other major industies, said Strauss, and a flood of investment could have an out-sized impact upon miners and exploration companies.
"You'll get better valuation and ultimately...one of the greatest transformations of an industry."
Panelists also discussed gold's drop, the Peru election and Zijin Mining's big milestone at its Cukaru Peki copper and gold mine located in Serbia.
Automaker are being forced into operational roles in the mining sector, said Rho Motion's Adam Panayi on Friday.
The managing director of Rho Motion recorded a Kitco Roundtable podcast with correspondent Paul Harris, Mining Audiences Manager Michael McCrae and editor Neils Christensen.
To make electric vehicles, automakers are going to need a lot more cobalt, lithium, nickel and copper than is currently being mined.
Panayi said large automakers getting into the mining business is "inevitable" since the magnitude of some of the special materials needed is nearly akin to building an "entire sector from scratch."
"You are going to need continuing investment in that market for [nearly] the next two decades in order to keep pace with the growth of EVs and other battery technologies," said Panayi.
Gold's slide was stopped by a job's report that was a disappointment but not a complete breakdown, said editor Neils Christensen.
On Friday Christensen recorded a podcast with correspondent Paul Harris, Mining Audiences Manager Michael McCrae and guest Luke Alexander, CEO of Newcore Gold.
Friday’s nonfarm payroll report showed that the U.S. economy added 559,000 jobs in May, slightly shy of consensus expectations of 675,000. The unemployment rate is now at 5.8%, the lowest level since the start of the pandemic.
Gold saw a lot of volatility this week – first falling more than $40 and then climbing back up towards the $1,900 an ounce level after Friday's jobs report drop.
"We were expecting 645,000 and we just got over half a million--still a miss. It was a disappointment, but it wasn't the complete breakdown that we saw the other month," said Christensen.
Newcore Gold is developing its Enchi Gold Project in Ghana. Before assuming CEO of Newcore, Alexander worked in finance with stints at BMO Nesbitt Burns, National Bank and GMP Securities in London.
People should always have an exit in mind when they invest, said Nicole Adshead-Bell, director at Cupel Advisory.
On Friday Adshead-Bell recorded Kitco Roundtable podcast with correspondent Paul Harris and Mining Audiences Manager Michael McCrae.
Adshead-Bell has a PhD in geology as well as 24 years of capital markets experience. When investing Adshead-Bell said people should have a target sell price.
"My key takeaway is we're all very good at buying. We're less good at selling. [You] might have a paper [gain], but if you don't execute...and extract value from that position, you don't really have anything at the end of the day."
Once again, the gold market has regained its luster as investors moved back into the precious metal and out of volatile cryptocurrencies. With gold price ending the week above $1,850 an ounce, junior explorers should start to see price movements, according to David Erfle, founder of juniorminerjunky.com.
Lundin Gold's Fruta Del Norte is one of the largest and highest-grade gold projects currently in production, and maybe there is a second down the road from the first, said CEO Ron Hochstein.
On Friday Lundin Gold's (TSX:LUG) Hochstein recorded Kitco Roundtable podcast with correspondent Paul Harris, Mining Audiences Manager Michael McCrae and editor Neils Christensen.
Opened last year, the 340,000 ounce per year gold mine is seeing some stopes grading 30-40 grams per tonne of gold, said Hochstein. The all-in sustaining cost is $770 - $830 per ounce. Acquired in 2014, the project came with a large land package, which the company is actively exploring. Hochstein said there are two drills turning at a project called Barbasco.
"Steve Leary, who was the exploration manager at Aurelian Resources when they discovered Fruta Del Norte, feels that the [project] has all the signatures of another Fruta Del Norte, and it's just seven kilometers away," said Hochstein.
The panelists also discussed record copper prices. On Monday, copper hit all-time high of $10,747.50. Copper has stayed above $10,000 level throughout the week. But copper did retreat and was down 1.1% for the week. The other news of the week was Filo Mining, which reported 858m at 1.80% copper equivalent and also a new high-grade feeder zone discovery at Filo Del Sol project in San Juan province, Argentina.
The good hole sent the company up 66% for the week to close at $7.57 a share on Friday.
AIM-listed Bacanora Lithium (LON: BCN) announced Thursday it has agreed to a $264.5 million acquisition by its offtake partner, Ganfeng Lithium.
The deal was highlighted by correspondent Paul Harris who recorded Kitco Roundtable podcast on Friday with Mining Audiences Manager Michael McCrae, editor Neils Christensen and special guest Mark Fellows, co-founder of and director at Skarn Associates.
This year most of the big deals in the metals space have been battery materials. McCrae noted deep sea miner, The Metals Company, going public in a $2.9bn SPAC deal announced in March. The company is focused on polymetallic nodules rich in nickel, copper and cobalt. In April Lithium miners Orocobre and Galaxy Resources merged to create the world's fifth-largest global lithium chemicals company. The companies said the merger consolidates the group's position in Argentina. The deal was valued at A$4 billion.
The Bacanora deal returned focus to the battery materials space after last week's big precious metal M&A: Fortuna Silver Mines and Roxgold combining in a $884 million deal.
The panelists also discussed record high copper prices, the dismal jobs report and Pandora Jewellery dropping mined diamonds.
While copper has been sizzling the metal is due to fall back to earth in the second half of the year, according to a BMO Capital Markets report.
On Friday editor Neils Christensen, correspondent Paul Harris and mining audiences manager Michael McCrae discussed mining and metal events over the past week on Kitco Roundtable. Special guest was Sean Roosen, executive chair of Osisko Royalties and director at Osisko Mining.
On Thursday copper poked its head above the $10,000 a tonne mark on the London Metal Exchange before falling back. The last time copper rose above $10,000 was in February 2011, when it touched a record of $10,190.
Elevated copper prices in 2021 have resulted in blow out quarters for the copper miners.
The world's top copper producer, Codelco, said profits soared to $1.63 billion in the first quarter of 2021. Teck said its profits were 247% higher, thanks to copper. First Quantum, which had been beating off a Chinese suitor a year ago, said revenues were up 42% and Grupo Mexico, the world's fifth-largest copper miner said on Thursday that its revenues were 40.2% higher.
But watch for prices to start coming down, warns BMO Capital Markets in a study released this week. Policy normalization in China in the second half of this year will see reduce frenzied buying for copper and other commodities.
Goldman Sachs is bullish on copper long term. It had a study out mid-April calling copper the "new oil" due to energy transition. Goldman pegged copper at $15,000 a tonne over the next four years.
The Roundtable panel also discussed the Fed's announcement, First Cobalt and Global Sea Mineral Resources' troubled mining robot prototype.
Lithium miners Orocobre and Galaxy Resources merged this week in a A$4 billion (US$3.1 billion) deal to create the world's fifth-largest global lithium chemicals company.
The deal was highlighted by Mining Audiences Manager Michael McCrae on Kitco Roundtable recorded with Kitco correspondent Paul Harris, editor Neils Christensen and special guest Stephen Twyerould, CEO of Excelsior Mining. The show was recorded on Friday.
In January Pilbara Minerals finalized its purchase of Altura lithium. Deal was valued at $201 million.
Last month deep sea miner DeepGreen Metals went public with a special purpose acquisition company, which valued the new entity at $2.9 billion. DeepGreen, recently renamed The Metals Company, is targeting metals in the EV space like nickel, copper, cobalt and lithium.
Copper's centrality to the new economy makes it potentially destabilizing as countries scramble for more supply, said Robert Friedland who gave opening remarks at the CRU conference this past week.
On Friday editor Neils Christensen, Kitco correspondent Paul Harris and mining audiences manager Michael McCrae recorded a podcast with guest Ryan King, Vice President Corporate Development at Calibre Mining. The panelists discussed gold and inflation, as well as rising commodity prices due to energy transition and metals needed to build future infrastructure. The group noted Friedland's remarks, as well as the copper note published by Goldman Sachs.
On Tuesday Friedland gave the keynote at the CRU World Copper Conference. He is advancing his massive tier-one Kamoa copper mine in the DRC set to officially open this year.
Copper will be key to the energy transition as countries build more electric vehicles powered by renewable energy. Under-investment and lack of tier one mines makes copper a potentially destabilizing force as countries classify certain metals as strategic. At the conference Friedland said copper is a "national security issue."
Goldman Sachs also plumped for copper this week. Analysts at Goldman declared the metal “the new oil” and predicted that the copper price would reach $6.80 per pound by 2025.
Copper was up about 3% for the week, and as of Friday June copper futures were $4.17 per lb.
In February copper hit a multi-year high.
Calibre Mining operates the El Limon and La Libertad gold mines in Nicaragua. 2021 gold production is expected to be between 170,000 - 180,000 ounces.
The wide degree of speculation that is needed to author a preliminary feasibility study and other economic documents is not clear to the general investor, said Douglas Silver, CEO of Balfour Holdings.
On Friday Silver joined editor Neils Christensen, Kitco correspondent Paul Harris and mining audiences manager Michael McCrae to record a podcast.
Silver has had a career being on the right side of industry trends. He was founder of International Royalty Corporation, which was acquired by Royal Gold in 2010. Total deal size was C$750 million. Silver also helped get the Denver Gold Group off the ground, a leading industry show.
In discussing his issues with economic studies produced by juniors and developers, Silver pointed out that capital cost need to build a mine typically are 30% to 60% over budget. A lack of standards by the firms generating the studies are part of the problem. There is just too much variability.
The economic studies are just forecasts, but they can mislead investors.
"Preliminary economic estimates are very, very important, but they're important internally for the company for designing future programs," said Silver, noting that an investor expecting a 35.5% internal rate of return on a project when capital costs are libale to swing +/-35% is a gross misrepresentation.
Silver would like to see better regulation and standards, warning that if the issue is not fixed it could lead to erosion of trust.
Last month nickel prices looked like they may break to a level that would support new mine development, but news out of Indonesia ended the rally, said Ken Hoffman, Co-Leader EV Battery Materials Group at McKinsey.
On Thursday Hoffman joined editor Neils Christensen, Kitco correspondent Paul Harris and mining audiences manager Michael McCrae to record a podcast.
With electric vehicles coming to the fore with government incentives and broad consumer acceptance, more batteries are going to be needed, and nickel is turning out to be a key battery metal.
However, supply is limited. The recent rise in nickel prices may have started to trigger new mine development, but news from China’s Tsingshan Holding Group stopped the rally. In early March, news that Chinese stainless steel and nickel giant Tsingshan's decision to produce a large amount of nickel matte in Indonesia eased concerns over battery-grade supply, according to a report by Reuters.
In February nickel hit its highest level since 2014, $20,110 a tonne.
According to Reuters, Tsingshan said on Wednesday it would supply 100,000 tonnes of nickel matte - an intermediate product that can be used to make both stainless steel and battery-grade nickel for electric vehicles (EVs) - to Huayou Cobalt and CNGR Advanced Material within a year from October. Nickel prices subsequently tumbled. Hoffman said nickel prices need to be higher for mine development to proceed.
"I do think that we have to get the price of nickel higher. It's a shame if Indonesia does not come through with this new process. It's really delayed the price point of nickel to get new projects because most nickel miners want something in the twenties before they get comfortable making massive investment," said Hoffman.
"The fact that it's fallen down to about 17,000 again is a bit disappointing because it just delays that investment decision."
As of today, the cash nickel price on the LME is $16,001 a tonne.
The podcast also reprised its conversation with Frank Giustra, CEO of Fiore Group, who has challenged Michael Saylor, CEO of MicroStrategy, to a public debate on gold versus Bitcoin.
Giustra told Kitco News that his intent is to help Saylor clarify some of the things he’s said publicly about gold and challenge Saylor’s thesis.
“I am not a Bitcoin hater. I just think that [Saylor’s] thesis on gold and Bitcoin needs to be explored and I think I would love the opportunity to explore some of the statements that he’s making on some of these interviews [that he’s done],” Giustra said.
The adjustments miners had to make during the pandemic may have resulted in speeding up automation, said Eric Winsborrow, EVP Corporate Strategy, Wenco International Mining Systems.
On Friday Winsborrow joined editor Neils Christensen, Kitco correspondent Paul Harris and mining audiences manager Michael McCrae to record a podcast.
A subsidiary of Hitachi Construction Machinery, Wenco provides technology solutions to its parent company, such as fleet management and mining analytics.
During the pandemic, miners relied more on automation to keep people from coming into close quarters.
"The experience of not being able to have people on the mine site has really accelerated the realization that we don't need people on the mine site," said Winsborrow.
Winsborrow said miners are now embracing technologies like cloud infrastructure, so more mines can be managed remotely. Western Australia's Pilbara is a center of mine automation.
"How do you manage 13 mines in the Pilbara from one location? How do you manage multiple operations remotely? I never heard miners talking cloud. Now they are all talking to us about it," said Winsborrow.
Nearly one year ago, the gold/silver ratio rose to a historic high above 124 points. Since then, the silver market has significantly decoupled from gold. The ratio has fallen back to historic norms around 65 points, a decline of nearly 50% from the all-time highs.
According to the CEO of the largest silver producer in the U.S., silver's move is just starting. Friday's Kitco Roundtable guest was Phillip Baker, CEO of Hecla Mining and he described silver as the new techno metal as its industrial demand continues to grow.
"Silver is in a unique position that it's never been in before. And not the pandemic and it's not even the fiscal and monetary stimulus that we've had," he said.
Baker said that the world's commitment to decarbonizing the global economy by developing clean, renewable energy to producing more electric vehicles, will be an essential pillar of demand for silver. He added that new industrial fabrication could boost silver demand to 600 million ounces in the next 20 years.
"[Silver] really is a unique metal. It has characteristics that no other metal has," he said.
Not only is silver demand expected to continue to grow, but Baker said that supply is also reaching its limit as there has not been any significant new mine development in years. He added that if this trend continues, supply will struggle to keep up with demand.
However, Baker added that Hecla is in a good position to remain a leader in silver production. Baker noted that Hecla producers about a third of all the silver in the U.S.
Looking at the company's growth, Baker said that its Lucky Friday Mine in Idaho still has plenty of future growth. Even after 75 years in operation, the company is looking at ways to improve production. Baker said that the mine currently produces 2 million ounces of silver and the company expects that to increase it to 5 million ounces in two years.
Baker also noted that aside from Lucky Friday, the company has plenty of growth potential in its pipeline.
"We have, over the next 10 years, maybe up to seven properties that could go into production," he said.
Copper prices are high, and inventories are low, but the CEO of Kodiak Copper, Claudia Tornquist, said there is another bullish indicator for the base metal.
On Friday Tornquist was a guest on Kitco Roundtable podcast with correspondent Paul Harris, editor Neils Christensen and mining audiences manager Michael McCrae.
Kodiak is advancing its MPD copper-gold porphyry project in southern British Columbia.
As of Friday afternoon, spot copper was $4.13 a lb. The recent price spike is significant. Copper has not seen prices at these levels since 2012.
London Metal Exchange copper stock have also dropped below the 100,000 level.
"Inventories are at an all-time low. I always look at the treatment and refining charges, and those are at rock bottom. Copper smelters are really scrambling to get their hands on raw material to service their clients," said Tornquist.
Supply is constrained, said Tornquist. Regarding mine development she said there isn't much on the horizon. Over the past decade there are only four discoveries of a significant size.
"Many mines are getting old and declining in production, and the development pipeline is very low. So there's not much there to replenish declining production, and many commentators see a significant supply gap of 5 million tonnes a year."
The Roundtable also reprised an interview with Agnico Eagle's CEO Sean Boyd. The company has continued to grow its portfolio through acquisitions. The company acquired TMAC Resources in early 2021.
With nickel prices spiking last month to six-year highs and EV automobile projected to go parabolic, the industry is starting to realize there is not enough metal available.
On Friday Kore Mining's VP of exploration, Michael Tucker, joined Kitco Roundtable podcast with correspondent Paul Harris, editor Neils Christensen and mining audiences manager Michael McCrae.
Last month LME nickel traded at a six-year high, hitting $19,689 a tonne before falling back.
Tucker said nickel is a key material for electric vehicles, and the metal is expected to have one of the highest multiples of current demand.
If the battery tech stays the same and EV adoption continues apace, Tucker predicted unprecedented demand: an increase of 400,000 to 500,000 tonnes per year by 2025 and upwards of 1,000,000 tonnes per year by 2030-2035.
On top of that, batteries are also picky about their nickel. Only Class 1 or 99.9% pure nickel is usable.
Until recent price spikes, years of low nickel prices resulted in lack of projects.
"The sad story is that we haven't done a great job as explorers looking for nickel sulfide deposits in the last 20 years," said Tucker. Nickel deposit types of roughly divide into sulfide and laterite deposit types. The nickel from sulfides is usually easier to extract and found further north. Laterites are usually near the equator.
Projects can't advance without better prices. In 2018, Yukon-based Nickel Creek Platinum said what it needed to advance its project.
"The company believes it wouldn't be prudent to complete a PEA [preliminary economic assessment] until the emergence of improved financial market conditions and a stronger commodity price environment, and notionally not until nickel prices settle in the range of at least US$9.00 to US$11.00 per pound," wrote Diane Garrett, President and CEO Nickel Creek Platinum in a 2018 news release.
Last month's price hike fell short of $9 a pound.
Size of the deposit matters, too. When Tucker was exploring for nickel, his economic baseline was 100,000 tonnes contained nickel at around 1.75% to 2%.
"Because that's something that'll work really well in an underground environment at most nickel prices," said Tucker.
"And if you're looking for the same thing in open-pit scenario, we really liked 0.65% with the same amount of contained nickel...that seems to be a bit of a magic number for things getting developed or not developed in the sulfide space."
It's the speed of the industry that John Skinner notices most when remarking on changes in mining and finance.
On Friday Skinner was a guest on Kitco Roundtable podcast with correspondent Paul Harris and mining audiences manager, Michael McCrae.
Skinner has been in and out of the resource sector since starting his career in the mid ‘80s at Yorkton Securities.
"The thing I've noticed since I was in the industry is just how different and how much faster everything happens because of social media. You used to have to wait for a newspaper to come out. The rumor mill happens and it's instant. It's faster. It's more ferocious and due diligence is that much faster," said Skinner.
"I'm really excited for guys in the industry."
Success in the industry led him to pursue another passion: wine. In early 2004 he purchased land in Osoyoos and started Painted Rock Winery. He recently returned to the industry with the general lift in resources. Skinnner is independent director at Meridian Mining, which is focused on projects in Brazil.
Skinner also noticed how the slow years in the resource sector between '08 and '15 led to a talent gap.
“There's a certain age group in the 2008 to 2015 window. [People] weren't coming into the industry,” said Skinner. “But now…it’s attracting people. It’s attractive again, and it feels like the market is on.”
Kicto Roundtable also reprised its video with Danielle DiMartino Booth.
The U.S. 10-year Treasury yield briefly surged above 1.6% on Thursday.
Until the Federal Reserve declares an intervention to bring down the long-end of the curve, equities markets could see continued "nervousness" said Danielle DiMartino Booth, CEO of Quill Intelligence.
With copper hitting a multi-year high, copper projects can start moving into the development phase, said Ashley Heppenstall, director at Lundin Mining and chair of Joemaria Resources.
On Friday Heppenstall joined editor Neils Christensen, correspondent Paul Harris and mining audiences manager, Michael McCrae to record Kitco Roundtable.
Lundin Mining (TSX:LUN) is a copper, nickel, zinc and gold producer. Today, the company reported a $498.1 million in gross profit, an increase of $57.7 million in comparison to the prior year off of strong base metal prices. Heppenstall's Josemaria Resources is advancing a copper-project in Argentina.
The copper market is firing on all cylinders with the prices pushing above $4 a pound, the metal's highest level since September 2011. April high-grade copper futures last traded at $4.069 a pound, up 4% on the day. The base metal is up more than 56% since the start of the year. In London markets, copper prices are trading at $8,940.50 a tonne. Investors believe copper's future looks bright. Energy transition to renewables is going to require lots of copper.
Up to now Heppenstall said there has been an extended period where companies did not invest in new supply. Companies were rewarded for conservatism, but the recent spike in copper prices has changed the landscape. When asked if an incentive price for moving projects forward had been hit, Heppenstall said: "we're pretty much there already."
"Boards and management need to be a little bit more aggressive," said Heppenstall, who noted a steep drop in copper supply with demand set to increase.
During the podcast, David Lin's interview with Peter Grandich was reprised. Grandich is founder of Peter Grandich & Co. With the world embracing renewable energy, nuclear power will see substantially more use in energy grids around the world and with it bring up uranium prices and uranium stocks, said Grandich.
Heppenstall's Josemaria Resources' feasibility study imagines an open pit operation feeding a conventional process plant at 152,000 tonnes per day over a 19 year mine life, yielding average annual metal production of 136,000 tonnes copper (Cu), 231,000 oz gold (Au) and 1,164,000 oz silver (Ag) per year.
Several miners released record cash hauls at year end, but investors are showing the sector scant love.
On Friday Kitco Roundtable podcast featured editor Neils Christensen, correspondent Paul Harris and mining audiences manager Michael McCrae. Special guest was Sam Riggall, CEO of Clean TeQ.
Riggall's company is developing a nickel-cobalt-scandium project in New South Wales. The company is positioning itself to supply materials for the electric vehicle materials market.
Riggall said the project is large.
"Sixty-five per cent of the current U.S. passenger fleet could be converted to fully electric vehicles using the nickel and cobalt in our Sunrise resource in Australia," said Riggall.
Turning to gold Neils Christensen said precious metal miners are generating record cash flow, but investors are generally ignoring the sector.
Some of the miners who released 4Q earnings this past week were Agnico Eagle and Kinross. In 2020 Kinross had operating cash flow of just under $2 billion compared to 1.2 billion in 2019. Agnico's cash for the full year was C$1.19 billion, up from $882 million the year prior. Newcrest had its half year with earnings per share up 121% compared to the prior period. Half-year free cash flow was $439 million.
Despite the big numbers, investors aren't responding. Over the past month, the GDX ETF, which tracks the major gold miners, is down 6% to $34.78.
"I don't know what it is going to take to shake this malaise," said Christensen.
Kitco Roundtable reprised anchor David Lin's interview with Alex Mashinsky, CEO of Celsius Network, which aired on Tuesday.
Tesla has stated in its latest annual report that the company has updated its investment policy to now include bitcoin, gold, and “other assets” as possible investments.
"What they’re not telling you is they don’t trust the U.S. dollar. They’re saying by voting for Bitcoin and putting gold as a reference. They’re basically saying we do not want our treasury to be held in U.S. dollars because we expect high inflation, we expect debasement, we expect everything besides good news about the U.S. dollar,” Mashinsky said.
Tesla's announcement that it invested in bitcoin sent the stock up 2%, although the stock has since settled.
"The gold miners should buy bitcoin," quipped McCrae.
Today's labor report showing deeper than expected job losses in January will support stronger stimulus measures, which could be bullish for gold, said Kitco editor Neils Christensen.
On Friday Christensen recorded Kitco Roundtable podcast with mining audiences manager Michael McCrae, correspondent Paul Harris and ValOre Metals CEO Jim Paterson.
The U.S. Labor Department released its jobs report today indicating that the number of new jobs gained in January came in at 49,000, and the unemployment rate fell from 6.7% to 6.3%, wrote contributor Gary Wagner. Although there was a down-tick in the unemployment rate, last week Jerome Powell said that the “real” unemployment rate is most likely higher and is probably closer to 10%.
Christensen noted that real economic damage to the economy is putting steam behind the Democrats' larger stimulus plan.
"There's still a lot of heavy lifting to do in the U.S. economy to improve the labor market. And I think that's going to be good for gold and silver," said Christensen.
Reuters reported that President Joe Biden and his Democratic allies in Congress forged ahead with their $1.9 trillion COVID-19 relief package on Friday as lawmakers approved a budget outline that will allow them to muscle Biden’s plan through in the coming weeks without Republican support.
Speaker Nancy Pelosi predicted the final COVID-19 relief legislation could pass Congress before March 15, when special unemployment benefits that were added during the pandemic expire. Republicans have floated a $600 billion aid package, less than a third the size of the Democratic plan.
Paterson's ValOre is advancing a PGE+Au project in northeastern Brazil. The Pedra Branca PGE Project comprises 38 exploration licenses covering a total area of 38,940 hectares (96,223 acres). At Pedra Branca, five distinct PGE+Au deposit areas host, in aggregate, a current Inferred Resource of 1,067,000 ounces 2PGE+Au contained in 27.2 million tonnes grading 1.22 g/t 2PGE+Au. The company says that all the currently known Pedra Branca inferred PGE resources are potentially open pittable.
ValOre is under the Discovery Group umbrella, an alliance of nine public companies that include Great Bear Resources and Fireweed Zinc.
The podcast also reprised David Lin's conversation with Kendra Johnston President & CEO, AME. She outlined the metals to watch for as the as the economy shifts to renewables.
Watch the flows of cash from one sector to another to see when mining truly turns bullish, said Hedley Widdup, executive director of Australia-based Lion Selection Group.
On Friday, Widdup recorded Kitco Roundtable podcast with editor Neils Christensen and mining audiences manager Michael McCrae.
Widdup traces the history of the mining booms and busts starting with the mining boom that ended in 1998 due to the East Asian currency crisis and Bre-X scandal.
"[It] was an enormous wipe out of risk money, and it told people instantly you can't put your money in explorers because they're liars," said Widdup.
The dot-com bubble followed in the late 90s.
"It's like [money flowing] from one ocean to another. And whilst it's happy playing somewhere, it is probably not going to inflate anything else," said Widdup.
"I think we've seen a pretty reasonable run of risk money into the mining sector...but we really haven't seen the washout of tech, and if that was to happen, it might be bad for the equity market broadly, but mining would be the beneficiary in the years that follow."
Kitco Roundtable also reprised its interview with Peter Hug, Global Trading Director of Kitco.
Plans to short-squeeze silver to never before seen prices circulated on Reddit. Hug evaluated what it would take, hypothetically, for these plans to come to fruition.
Even with gold's recent falter heading into winter and its current range-bound price, Gran Colombia (TSX: GCM) CEO Serafino Iacono said gold at the $1,800 to $1,900 level has a lot of advantages.
On Friday Iacono recorded Kitco Roundtable podcast with correspondent Paul Harris, editor Neils Christensen and mining audiences manager, Michael McCrae.
In 2020 gold was not expected to do as well as it did. At the start of the year analysts at LBMA had an average gold price forecast of $1,558.8 ounce in 2020, up 12% from 2019. It was a big miss with the actual price averaging $1,769.59 ounce, an undershoot of more than $200.
Recently gold is caught in a wide trading range between $1,800 and $1,900, with the precious metal holding support but lacking momentum to move higher. As of Friday afternoon, February Comex gold futures were trading at $1,855.10, up 1.4% from last week's close.
Iacono who founded Gran Colombia said the current precious metal price is fine with him.
"I'm very comfortable with $1,800," said Iacono who noted that miners are still booking incredible profits, increasing dividends and paying down debt.
"It's not that I don't want gold to go higher. I want gold to go to $2,500, and I believe it will get there."
Iacono said the problem with high gold prices is that "stupid mines" are built--repeating mining's boom and bust cycle.
"I lived $1,000 gold. I never want to go through that problem again. When gold went to a thousand, I saw red stars and green stars and blue stars. So to me, $1,800 is a fantastic price because it keeps everybody honest and it, and the mines that are going to be built--the mines are efficient."
After acquiring TMAC Resources, Agnico Eagle (TSE:AEM) still intends to keep its exploration budget elevated.
On Friday CEO Sean Boyd recorded Kitco Roundtable podcast with correspondent Paul Harris and mining audiences manager Michael McCrae.
Agnico Eagle operates Canadian Malartic, the nation's largest gold mine. The company is a top ten gold producer, having produced 1.7 million ounces in 2019.
Agnico gave the sector a huge boost of confidence with the big M&A deal announced at the start of the year, the $286 million acquisition of TMAC Resources. Boyd said the deal was closed on its ability to generate net free cash flow.
"That's still the primary motivation for the investor base in the producers. And so when you introduce a new asset, they want to know where it fits in the pipeline," said Boyd.
Overall, he said miners and juniors need to drill more.
"Early-stage exploration—that's where the true value gets created. And I think from our perspective, that's another sort of strategic emphasis. We're bumping our exploration budget by 50% or $50 million in 2021. And that was prior to acquiring TMAC," said Boyd.
He forecasts more industry M&A.
"When you see a commodity do what gold has done in the last couple of years in the resource space, you tend to get consolidation. Gold is quite fractured in terms of ownership.
"There's just so many players relative to the number of quality opportunities, and this is still an industry that's capital constrained," said Boyd.
Regarding energy transition and switch to renewables, Boyd said he would like to see more powerlines to the north.
"The ultimate goal and the wish of a large part of the population in Nunavut is to have the hydro line run from Churchill, Manitoba, up into the Kivalliq region of Nunavut, collect communities along the way... and potentially benefit Meliadine mine," said Boyd.
Boyd admits such a project is a long way out. Wind is another option for mines in the north for mines making an energy transition.
"We've been discussing wind farms with the federal government. We know that the federal government had been talking to TMAC about wind technology and wind farm for Hope Bay, so we're going to pick up on the discussions," said Boyd.
While gold was flashing yellow, gold miners made a number of aggressive deals this week.
Ron Macdonald, CEO of Zinc8 Energy Solutions (CSE:ZAIR), joined correspondent Paul Harris and Mining Audiences Manager Michael McCrae to record Kitco Roundtable podcast on Friday.
Today gold tumbled around 4% as investors sold off the precious metal. February Comex gold futures were last trading at $1,839.40, down 3.88% on the day after breaching a key $1,850 an ounce level.
The fall is being blamed on a rise in bond yields and worries about the economy, resulting in liquidation and a flight to cash.
However, analysts are still holding onto a long-term bullish trend for gold. Writes that the year ahead is shaping up to be a ‘steady-as-she-goes’ year for Fed policy, which is expected to be generally supportive of precious metals for the next two to three years.
Despite gold's wobbles, miners announced big moves this week. Agnico Eagle bought TMAC Resources for $286 million Canadian. Of course Shandong announced its takeover offer last May after TMAC but was prevented by federal government with Canadian and China relations souring. Agnico Eagle paid about 26% higher than Shandong's bid.
SilverCrest Metals announced this week that it secured project financing facility of US$120 million with RK Mining to build its Las Chispas project in Mexico. SilverCrest already has a contract with Ausenco for construction. Commissioning of the process plant is targeted for Q2 2022 and production ramp-up is slated to begin in Q3 2022.
Macdonald's Zinc8 develops energy storage technology. Macdonald is excited about the political changes ahead in the U.S., and the Biden administration should be supportive of moves towards renewables and electrification.
When asked what factor will have the most significant impact upon mining and metals over the next decade, social license and electric vehicle material demand were common choices amongst a panel of news editors and special guests.
Correspondent Paul Harris, editor Neil Christensen and Mining Audiences Manager Michael McCrae recorded Kitco Roundtable Christmas Special last week.
The panelists looked back at the year that was and also looked forward to the next ten years. There were appearances by Sprott's CEO, Peter Grosskopf, and Wheaton Precious Metals CEO, Randy Smallwood.
Other topics the panel weighed in on were deciding what will be the top-performing metal over the next decade and what were the top news headlines of 2020. COVID-19 was not selected. The editors felt that COVID-19's effects were limited to just 2020. There are other stories that will have a more profound and lasting impact.
McCrae chose Vale's difficulties in New Caledonia, which tie together themes of EV materials, social license and China's strategic tie-up of resources outside its borders. Harris chose the tightening of emission standards at mines, and Christensen liked Warren Buffett's decision to invest in Barrick Gold, resulting in the mainstreaming of precious metal investing.
The competing theories for gold heading higher or trending lower were explored on Kitco Roundtable on Friday.
Andrew Cheatle, recently-appointed director of Tanzanian Gold (TSE:TNX), joined correspondent Paul Harris, editor Neils Christensen and Mining Audiences Manager Michael McCrae to record Kitco Roundtable podcast.
Christensen said there are many reasons that gold will head higher.
"Pretty much everybody's saying the same thing, which is unprecedented central bank and government stimulus policies across the globe," said Christensen. "Central banks and governments are pumping trillions and trillions of dollars into financial markets, and this is going to create inflation.
"On the downside is obviously equity markets, and we're hitting record valuations. It just feels like this is the bubble that can go on forever, especially as we get a vaccine roll out."
The panel also discussed a series of social license stumbles in the mining industry: the troubles Vale is facing in New Caledonia due to the sale of the company's nickel complex and Rio Tinto's new CEO appointment, Jakob Stausholm, who is replacing outgoing Jean-Sébastien Jacques after the miner blew up sacred Aboriginal rock shelters in the spring.
"I think we've got a lot of work to do in terms of overturning public perceptions, which often to me seem to be stuck in the 1970s," said Cheatle. "It's our job to, to build the trust, uh, with society at large and with the governments that we work with."
Lots of deals despite soft precious metal prices
There was a noticeable uptick in the number of deals in the junior space this week despite wobbly precious metal prices.
George Salamis, president and CEO of Integra Resources, joined correspondent Paul Harris, editor Neil Christensen and Mining Audiences Manager Michael McCrae to record Kitco Roundtable podcast on Friday.
Gold's momentum has slowed. The near-term sentiment in the gold market is mixed as the price runs out of momentum testing critical resistance around $1,850 an ounce according to the latest results of the Kitco News. Wall Street analysts are mostly bearish with 40% calling for lower prices. Main Street investors bucked the trend with 54% as bullish.
Despite softer precious metal prices, there were some headline deals.
Wheaton Precious Metals is putting its money to work once again announced in a new streaming agreement with Capstone Mining Corp. On Friday the precious metals streaming company said that it would pay Capstone $150 million for 50% of its silver production up to 10 million ounces. The agreement then falls to 33% of production for the rest of the mine life, the company said.
Ascot Resources (TSX: AOT; OTCQX: AOTVF) announced on Thursday the closing of a US$105 million project financing package with Sprott and Beedie Investments. The financing is comprised of a senior credit facility for US$80 million provided by Sprott, and a subordinated convertible facility for US$25 million provided by Beedie and Sprott.
Northern Vertex Mining (TSX.V:NEE, OTC-NASDAQ Intl: NHVCF) and Eclipse Gold Mining (TSX.V:EGLD, OTC:EGLPF) announced Monday that they have entered into a definitive arrangement agreement to combine in an at-market merger. This merger will create a new gold growth resource business focused on the Western United States. Northern Vertex will be the resulting company with offices in the U.S. and Canada.
Salamis said the deal environment looks great.
"You've got the major mining companies who are producing gold predicated on mine plans that were done a year or two years ago at $1,300-$1,400 gold [now looking at] a $1,800-$1,900 gold envrionment, plus a $20 silver environment," said Salamis. "They're making money hand over fist, and they're wiping out debt to the tune of about 30% per quarter."
"We're not, we're not fussed at all by this weakness that we've seen with the gold price lately. We believe the long-term fundamentals are still there."
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Colorful mining dealmaker, Ivan Glasenberg, will retire as the head of Glencore, the huge mining giant and one of the top 500 largest public companies in the world.
Minining Audiences Manager Michael McCrae noted the change during Kitco Roundtable podcast, which was recorded on Friday. McCrae was joined by correspondent Paul Harris; editor Neils Christensen; and special guest Terry Harbort, CEO of Talisker Resources.
Ivan Glasenberg joined Glencore in April 1984 and has been CEO since January 2002. Glasenberg led the deal that saw the $90 billion merger of Glencore with Xstrata in 2013.
Glencore is one of the world’s largest globally diversified natural resource companies with 160,000 employees and contractors and $11.6 billion in earnings in 2019.
Glasenberg's successor is Gary Nagle who has held senior roles in coal and ferroalloys. Nagle is 45, Glasenberg 63.
"Glasenberg's departure will mark a shift to a new, younger leadership for the business, which, along with other mining companies, has faced increasing pressure from investors to cut carbon emissions," writes Reuters.
The roundtable also noted that Seabridge Gold expanded its footprint in B.C.'s Golden Triangle after picking up Pretium Resources' Snowfield project for $105 million. Osisko Mining made headlines with its drill result at Windfall, a project Harbort helped advance before his current role at Talisker.
Harbort was asked what decisions he made when building his company and his team.
"Our strong belief is that exploration is a science, and we need to apply that science to be successful as an exploration company," said Harbort. "A lot of companies can [be] a bit of lucky...a little bit of serendipity. We hear all those stories and we all have a bit of a joke about them, but the majority of good discoveries and teams that make multiple discoveries [are] based on systematic exploration and the application of good science."
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The good news about the development of a vaccine is hammering gold, said Kitco editor Neils Christensen.
Christensen joined Mining Audiences Manager Michael McCrae and Marcel de Groot, co-founder and president of Pathway Capital, to record Kitco Roundtable podcast on Friday.
This past week Bank of America reversed its position on gold and was turning from positive to neutral. In April, the bank made a big announcement and forecasted $ 3,000-ounce gold. Christensen covered the news.
"One of the first things [Bank of America] said is we're abandoning $ 3,000-ounce gold, and we're now neutral, and my jaw physically dropped," said Christensen.
While gold may be slipping, analysts are constructive on silver in 2021.
With a pick-up in the global economy, industrial demand for silver should increase. Bank of America predicted $29 oz. CIBC sees $32 oz. As of recording this on Friday at noon, spot silver is just above $22.
With a Biden administration in the White House, more investment in green tech like silver-hungry solar panels is expected.
Despite gold's drop, De Groot sees the metal doing well over the long run.
"I'm very bullish on gold. Over the next two or three years, we might get some scary moments. I'm never too pleased about analysts jumping on or off the bandwagon. I tend to look more at the macro factors," said de Groot noting the huge rise in debt levels worldwide.
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With markets looking past the disputed election and a stalled stimulus, editor Neils Christensen said gold is trending down in the short term.
On Friday Christensen was joined by correspondent Paul Harris and mining audiences manager Michael McCrae to record Kitco Roundtable podcast. Special guest was Patricia Dillon, former president of the PDAC.
Gold has been on the backfoot. This week saw massive gold-backed ETF outflows, which weighed on the precious metal. But the market held its ground at the critical $1,850 an ounce level and managed to end the week on a slightly more positive note, with December futures last trading $1,872.30, up 0.58% on the day.
Despite the outlook for another government stimulus in the U.S. starting to dim, Christensen said investors believe the good vaccine news may result in the economy getting back to normal sooner, thus the pressure on gold. But Christensen believes the fundamentals still support precious metals going higher.
Governments have added debt in the trillions, and there are no signs of reversing, which is tying the hands of the federal reserve and other central banks.
"It's the perfect storm for gold. Whether there's a vaccine or not, gold is going up...and gold should continue to go up," said Christensen.
The panel also talked about SQM's expansion plans due to lithium output rising, rising diamond sales at De Beers and plans to host PDAC virtually.
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Australian M&A is heating up amongst the early-stage development companies, which could portend bigger deals worldwide, said Peter Akerley, CEO of Erdene Resources.
On Friday Akerley recorded Kitco Roundtable podcast with correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae.
Mergers and acquisitions have been muted due to senior miners being conservative. The companies are worried about excesses committed during the last upcycle, which ended up punishing the resource sector. COVID-19 travel restrictions have also made due diligence hard.
However, Australian miner Aurelia Metals made news yesterday when it acquired Dargues Gold Mine and assorted assets for about A$205 million. Akerley likes the news.
"I think the acquisition is important, but I really think it could be a bellwether of change for acquisitions in our industry. Australia is often ahead of the curve, and I do think that things will heat up here in the North American markets and in gold acquisition space," said Akerley. "I see a lot of discussions right now amongst the early stage developers, pre-development companies looking at a merger of equal type of opportunities."
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Mergers and acquisitions in the gold space are not likely to heat up until one to two quarters have passed, said Adam Lundin, CEO of Josemaria Resources (TSE:JOSE).
On Friday Lundin recorded Kitco Roundtable podcast with correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae.
Aside from running Josemaria, Lundin is also chair of Filo Mining, Africa Energy, and a director of the Lundin Foundation.
The panel noted that the precious metal miners are filing some spectacular numbers with gold holding above $1,900 for most of the last quarter. This past week Barrick Gold (NYSE:GOLD) reported in its Q3 that it generated US$1.3 billion in free cash flow--a record high. Kinross Gold also reported that it was sitting on $1B in cash.
Lundin notes that the seniors are still being conservative, and dividends are still relatively low.
"I'm not sure there's too many with a yield of more than 3%. So I think you'll continue to see an increase in dividends, but then everybody will look to grow," said Lundin.
"So in the first six months, dividend increases are steady as it goes. And then maybe you see some development acquisition take place."
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During a gold bull market, you need to go with growth, said Daniel Earle, CEO of Solaris Resources (CVE:SLS).
On Friday, Earle recorded Kitco Roundtable podcast with correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae.
At the 121 Mining Investment conference this past week, Earle noted comments from a mining CEO who said seniors need to be disciplined with their capital allocation during this up cycle and not go out and buy things at a high valuation.
"I think that that's a terrible mistake. I think the problem [during] the last cycle is that they were buying at the end of the cycle," said Earle.
Earle warns that seniors are running out of resources.
"If you look at how to create value in this business--it's a depleting business. You need to be buying up through the troughs in the cycle. In a gold bull market, you need to go with growth. That's where the outsize returns are going to be. Whereas within the seniors, they're playing a defensive game of not making mistakes. And I think that may appeal to large institutional investors, but that's not the square that we play in."
The panel also discussed the outstanding quarters that the gold miners are having now that they are mostly out from under COVID-19 work disruptions, and gold traded above $1,900 for most of the quarter.
This past week Newmont announced today a 60% increase to its dividend, its second dividend increase in 2020. It also recorded its best quarter in history. It realized an average gold price of $1,913. With an all-in-sustaining cost of $1,020, it was realizing over $900 on every ounce sold.
Agnico Eagle doubled its net income in the first nine months of the year at $306 million compared to the previous year. On top of the good results, the company increased its quarterly dividend by 75%.
At Yamana, gold cash tripled, and dividends are up 425% over the past 16 months.
Links mentioned during the podcast.
Daniel Earle Twitter
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Paul Harris Twitter
Michael McCrae Twitter
Dave Lowell video
The Democrats stimulus plan will be positive for gold, but it will be extremely positive for copper, said John Steen, associate professor at the University of British Columbia's mining school.
On Friday Steen joined Kitco Roundtable to discuss stimulus, renewables and the electrification of everything, and the knock-on affect on metals, chiefly copper and nickel. Steen was joined by correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae. Republican and Democrat leaders are negotiating a COVID-19 stimulus package in excess of $2 trillion. President Biden is ahead in the polls, which could tilt the eventual stimulus to policy goals favored by Democrats.
"A Biden win is extremely positive for copper. The estimated cost of preparing the electricity grid in the U.S. ... is about a trillion dollars. That's a huge stimulus, but it's a wicked amount of copper," said Steen.
Steen argues that the whole story of battery material demand seems to be driven by cars and Tesla, but that misses a larger picture.
"In the mining space, we have to look beyond the cars. Cars are getting a lot of attention [due] to the magnetism and charisma of Elon Musk, but there's a much, much bigger story here. It's the electrification of everything."
Steen notes that China plans to use its stimulus to decarbonize, and 4,000 tonnes of copper are needed to produce enough solar panels for 1GW of electricity.
Big miners like Rio Tinto and BHP Billiton are preparing for future copper demand. In the spring the number two gold miner, Barrick Gold, said it is on the hunt for copper deals. Earlier this week Newmont's Tom Palmer told Reuters that copper would account for up to one-fifth of the metal produced by the end of the decade given its current project pipeline.
Copper is currently trading at a two-year high.
B2Gold's recent quarter showed that the company will be a "cash machine," said the CEO of Troilus Gold, Justin Reid.
Reid joined editor Neils Christensen; correspondent Paul Harris; and mining audiences manager, Michael McCrae, to record a podcast on Friday.
Troilus Gold is an exploration and development company focused on a mine restart. The project is located in northeast of the Val-d'Or district of Quebec and produced 2 million ounces of gold and almost 70,000 tonnes of copper between 1996 and 2010.
This past week B2Gold announced 248,000 ounces of production in Q3, up 17% from a year ago. The company nearly tripled revenue coming in at $487 million compared to the $176 million from a year ago. Clive Johnson is CEO of B2Gold.
Reid, a former mining analyst, was impressed.
"First of all, they sold gold at an average price of $1,924 ounce," noted Reid. "When was the last time anybody did that? And...they're debt free. They paid back their revolver. They have absolutely no debt. Their cap ex is behind them, and now it's a free cashflow machine."
The panel also discussed other news:
Argonaut Gold is going ahead with a $380 million mine in Ontario.
China-based Shandong Gold Mining's $230 million acquisition of TMAC Resources is now under a security review.
Barrick Gold's third-quarter gold output dropped due to no production at the Porgera mine, in Papua New Guinea. In late April, the mine was placed under care and maintenance due to a dispute over its mining lease.
Frequent quarantine stays could be hard on a miner's well being, warns the CEO of Fireweed Zinc, Brandon Macdonald.
Macdonald joined Kitco correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae, to record a podcast on Friday.
Macdonald noted that some miners travel outside of Canada for work then have to return to a 14-day quarantine with no access to a gym or recreation. Meals must be eaten in the hotel room.
"So they're three-weeks on and two-weeks off. They come back to Canada and [start] a 14-day quarantine. Rinse and repeat. How sustainable is this?" asked Macdonald.
Harris noted that some mining companies are providing counseling to workers who travel off-site.
Macdonald noted that Fireweed operations are in Western Canada.
The group also discussed the Northern Star and Saracen merger, the biggest deal in the gold space in the past two years. The deal is valued at A$5.76 billion ($4.14 billion) and the newly-formed entity will be a global top-10 gold miner by market value. The panel also turned to Osisko Gold Royalties and its spin out of its Barkerville project.
Links:
- Michael McCrae on Twitter
- Niels Christensen on Twitter
- Brandon Macdonald on Twitter
- Colombia Gold Symposium, Nov. 10-13
- Fireweed Zinc