?? - Global Gold ETF's First Inflows In A Year
CEO.CA Presents the Chairman's Briefing - June 13th, 2024
"Civilized countries generally adopt gold or silver or both as money."
–Alfred Marshal
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Amex Exploration Announces New Gold Discovery Named the JT Zone
Amex Exploration (TSXV: AMX | FSE: MX0 | OTCQX: AMXEF)?announces a new gold discovery in a never-before-seen lithology within the Beaupré Block of the Perron project (Abitibi, Québec). The JT Zone is located ~750 m to the NNW of the High Grade Zone and ~600 m NW of the Team Zone.? The JT Zone was found within a felsic to intermediate dike with various levels of sulfide mineralization containing gold grades.
This mineralized dike could potentially add some significant low-grade, bulk tonnage ounces to the existing resources at Perron. There are also higher-grade ounces to be found within the quartz-carbonate veins in the aphanitic rhyolite. The team is excited to continue drilling in this area and grow their latest discovery.
In Today's Briefing
Gold
The precious metal was smacked down hard late last week—the worst drubbing in nearly three years—on the heels of a strong U.S. jobs report
Concerning China suppressing its appetite in May after 18 consecutive months of buying, this curb might best be characterized as a pause rather than a halt—a pause in light of the fact that the metal is flirting with record-high prices.
Concerning the strong jobs number published last Friday, there's been A LOT of talk about how the numbers simply don't add up - Inside The Most Ridiculous Jobs Report In Years. A snippet from this ZeroHedge piece...
And here is just May: more of the same as 625K full-time jobs were lost in one month, replaced by 286K part-time
Fed officials have repeatedly stated that they need to see more evidence that inflation is cooling
The Consumer Price Index (CPI) was unchanged last month after April’s 0.3% increase, the U.S. Bureau of Labor Statistics said on Wednesday. The latest inflation data was weaker than expected, as economists expected a 0.1% increase.
The Fed wraps up an (FOMC) meeting today. It's a given that there'll be no rate cut, but Chairman Powell's statement and press conference will be screened closely (new "dot plots" will be presented at the conclusion).
One recent piece of news supporting the precious metal: Global gold ETFs saw first inflows in a year in May, says WGC.
Gold ETFs, which store bullion for investors and are a major category of investment demand for the precious metal, saw the inflow of 8.2 metric tons, or $529-million, in May, the WGC, an industry body whose members are global gold miners, said in a research note.
Gold Equities
To say that gold equity investors lack conviction might be an understatement. The following chart depicts the junior gold miners ETF, the GDXJ—it's almost as though equity investors are expecting a total collapse in the metal (O Ye of Little Faith).
Silver
The $30 level in silver may represent a line where many future battles are fought. The metal has traded on both sides of this level after today's CPI...
Copper
Be Bold and Mighty Forces Will Come to Your Aid (someone once said that)
Going into the rally that saw copper take out record highs above $11k a ton last month, Rokos Capital and Andurand Capital tabled some weighty wagers on the long side - Hedge funds Andurand and Rokos took big copper bets before spike.
They made bank with these early wins, but they're betting on more upside. Waaaay more.
Rokos has made a flurry of options purchases in the past several months in a bet that copper could rally to $20,000 or more over the next few years, according to people familiar with the matter. At Andurand, copper was the biggest position by market exposure at the end of April, and the trader has recently predicted that prices could hit $40,000. Those targets are well beyond the forecasts of even the most bullish Wall Street banks.
Long positions held by fund managers on both sides of the pond (London and New York) have tripled this year. As of mid-May, $45 billion had flowed into long-side positioning, surpassing previous records set in 2018.
The influx of new money into copper has bemused some industry insiders, who point to weak demand in China and a well-supplied metal market. However, a series of mine setbacks in recent months has helped spur increasingly bullish investment bank forecasts suggesting that a long-predicted global shortage may arrive earlier than expected. The investment thesis for copper — that demand is expected to surge thanks to energy-transition demand — has also received a boost from recent excitement around artificial intelligence and data centers.
Andurand’s central commodities funds racked up gains of between 13% and 30% in April, thanks largely to their bold bets in the copper space.
“We believe that we are at the beginning of the copper bull-market and that the recent move higher in prices is just the start. Copper faces a decade-long supply deficit driven by the confluence of increasing demand due to the energy transition and persistent underinvestment in mine expansion.”
General Mining Sector News
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Ivanhoe's Congo Cu Complex Ranks Third Globally
Earlier this week, Ivanhoe Mines (IVN.TO) announced its first concentrate production from its?Kamoa-Kakula copper complex in the Democratic Republic of the Congo - Ivanhoe Mines Reports First Concentrate from Kamoa-Kakula's Phase 3 Concentrator on June 10, Several Months Ahead of Schedule.
Kamoa-Kakula, a joint venture between Ivanhoe (39.6%), Zijin Mining Group (39.6%), Crystal River Global Limited (0.8%), and the Government of the Democratic Republic of Congo (20%), is slated to produce between 440,000 and 490,000 tonnes of copper (in concentrate) this year, as per the company's guidance. Significantly, Phase Three was completed months ahead of schedule and on budget. Once fully ramped, the company expects output of 600k-plus tonnes per year.
With the addition of this third concentrator—Phase 3's capacity is 30% greater than Phase 1 and 2—Kamoa-Kakula now claims the third highest rank amongst the largest copper mining complexes in the world, behind only Escondida in Chile and Grasberg in Indonesia (it holds top spot on the African continent).
Interestingly, Ivanhoe is engaged in a balls-to-the-wall 70,000-metre drill campaign at its majority-owned, 2,650-km2 Western Foreland license (adjacent to Kamoa-Kakula) where ten rigs are currently turning at the Makoko and Kitoko target areas.
This initial phase of the program is designed to expand and delineate these high-grade copper discoveries ahead of potential engineering and planning work to study opportunities to also accelerate copper production growth from these licenses. Further exploration is planned on regional targets deemed prospective for additional sediment-hosted, high-grade copper deposits.
Freeport-McMoRan Looking for a New Gear
Freeport-McMoRan’s new boss, Kathleen Quirk, is thinking outside the box; says she’s intent on unlocking value in a massive stockpile of waste rock in an “aggressive” push to boost supply
The US copper giant has been generating strong profits in recent years from its operations in the US and Indonesia, drawing speculation it could put those returns toward takeovers after years on the sidelines. The firm spent much of the past decade cutting costs, reducing debt and resolving a yearslong dispute over ownership of Grasberg mine with Indonesia’s government.
CEO Quirk is betting big on a new technology, one currently under development, to extract copper from the waste rock that has been accumulating on the surface for decades. Over the next three to five years, Quirk hopes to generate up to 800 million pounds of copper through this new processing technology—equal to one-fifth of its current total production.
CEO Quirk: “That’s the size of a big mine. That’s meaningful. Our team is working very aggressively to get that done. I’m really focused on this issue, because when we look around, we know how hard it is to develop new supply.”
BHP, Rio Tinto Group, and Antofagasta Plc are also developing similar waste rock extraction technologies, or are working with outside parties to find ways to do so.
Addressing the dearth of available deals in the Cu space, Quirk went on to add:?“You’re looking at this situation with the market being so tight, and there are not obvious actionable projects that can fill that gap. That situation is causing us to be more innovative — to figure out how to help fill this gap.”
Freeport has already extracted an additional 200 million pounds of copper through the recovery process, and is targeting another 200 million pounds in the next two years. Developing the complex technology has stalled the firm’s push to hit 800 million pounds, but Quirk said the company is making progress.
Fireweed Coffers Stoked to Aggressively Drill Macpass
Last week, Fireweed Metals (FWZ.V) tabled a $30 million PP to fund an aggressive drill campaign at its flagship Macpass Project in Canada’s Yukon Territory - Fireweed Announces $30 Million Financing.
The following day it was upsized to $41.7 million with the Lundin family trusts, along with other key shareholders, expected to take down the full weight - Fireweed Metals Increases Private Placement to C$41.7M Million.
The offering comprises 12,727,273 common shares priced at $1.10 per share and 16,128,243 flow-through shares deemed “Premium Flow-Through Shares.”
On deck is a 14,000-meter campaign designed to expand the pound count at MacPass, considered one of the world’s largest undeveloped zinc resources, which currently stands at:
MacPass' mineralization is hosted in four main zones: Tom, Jason, Boundary, and End. Other targets spread across the project's 940 km2 area offer additional exploration upside.
Concerning the raise, Peter Hemstead, Fireweed's Interim CEO: "We are pleased to enjoy the continued backing of our key shareholders; their significant involvement in this financing underscores the excitement in the Macpass District as we continue to integrate with the Lundin Group of companies. The Offering proceeds will primarily fund our exploration initiatives for 2024, specifically through an extensive 14,000-metre drilling and regional exploration program at Macpass. This funding enables Fireweed to execute this year’s planned program without the need for additional capital.”
Royalty Package Deal Nets B2Gold a Cool $90 Mill
B2Gold (BTO.TO) has entered into a deal to sell ten precious and base metals royalties to Sandbox Royalties Corp, renamed Versamet Royalties Corp hereafter - B2Gold and Sandbox Royalties Partner to Create Versamet Royalties; B2Gold Receives $90 Million Equity Interest in Versamet.
Under the terms of the Agreement, Versamet will acquire ownership of the Royalties and as consideration will issue 153.2 million common shares to B2Gold at a price of C$0.80 per share, representing an equity ownership interest in Versamet of 33.0% valued at approximately $90 million.
The Royalties are comprised of the following:
According to B2Gold's CEO, Clive Johnson, value can now be assigned to a previously unrecognized group of royalty assets.
CEO Johnson: “As a significant shareholder, B2Gold is pleased to retain meaningful upside exposure and leverage to Versamet as its experienced management team stewards its strengthened asset base and continues executing on its growth strategy to create future shareholder value.”
BMO Capital Markets mining analyst Brian Quast says Versamet’s portfolio includes 28 royalties, with two cash-flowing and several expected cash-flowing soon. Quast maintains an ‘outperform’ rating and a price target of C$6.00 for B2Gold, suggesting that the bank views the transaction positively from an investment perspective. He quantifies the modest impact on B2Gold’s net present value, noting a slight increase from $3.764 million to $3.781 million.
Hits of the Week
China, the biggest official sector buyer of gold, is expected to resume its bullion shopping spree once prices ease from the record highs hit in May, as the fundamental case for the metal remains, industry players said at a conference this week - China's central bank to return to gold buying as prices ease, analysts say
One of the better performers of late is G2 Goldfields?(GTWO.TO) after the company updated the resource at its OKO-Aremu?project in Guyana in April and plans to do so again by year’s end to reflect the increase in contained metal related to ongoing drilling - JV Article: G2 Goldfields set for meteoric growth in heart of regional M&A boom
Canada’s Hudbay Minerals (HBM.TO) has reached a labour agreement with union leaders covering the construction of the Copper World mine in Arizona, United States. The deal marks marking a key step forward in the development of the copper mine, which is expected to produce about 92,000 tonnes of the metal annually for the first decade of its anticipated 20-year lifespan - Hudbay, unions reach deal for copper project in Arizona
Both opportunities and threats facing British Columbia’s burgeoning mining sector are revealed in a new report by PWC, as the province “primes itself to become one of the most reliable and sustainable suppliers of critical metals in Canada and globally” - Government regulation top threat facing British Columbia mining industry — report
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