??The Year End Finale

CEO.CA Presents the Chairman's Briefing - December 28th,?2023

"Regardless of the dollar price involved, one ounce of gold would purchase a good-quality man’s suit at the conclusion of the Revolutionary War, the Civil War, the presidency of Franklin Roosevelt and today."

—? Peter A. Burshre

Metals/Crypto Prices

In Today's?Briefing?

Gold

If one were to characterize the year we just had, one might trot out adjectives like stormy, tempestuous, tumultuous... 'volatile' is always popular in defining these markets.

Last year around this time, we noted how the precious metal was testing resistance at $1825. As I edit this piece, spot Au is pushing $2080. A further test of recent highs in the $2150 range might be in the cards.

Where the precious metals equities are concerned, if you were to quiz fervent bulls like Schiff and Lassonde, they'll tell you the seniors are trading as if the metal is mired at $1500, not $2k-plus. We don't need to tell you that the junior arena is wrapped in crime scene tape. But we've seen this movie before. If you're a contrarian, the current setup couldn't be more potent for a substantial re-rating.

A Tumultuous Year in the Rearview Mirror (chronological wise)

Global CBs in Accumulation Mode

In?a January 2023 Briefing, we highlighted that CBs are piling into Au with balls-to-the-wall abandon -?Central banks buy gold at fastest pace in 55 years.

We noted that the last time a buying binge of this intensity presented itself marked a historical turning point for the global monetary system. The accumulation continues unabated, with the World Gold Council recently revealing that the hoarding is still at a record pace, with China, Poland, and Singapore demonstrating the biggest appetites in recent weeks.

U3O8 Makes an Impression

In?a February 9 2023 Briefing, we highlighted how U3O8 demand is ratcheting higher due to one single compelling fundamental—we burn through 190 million pounds a year and extract only 130 million -?Uranium price expected to rise in 2023 on nuclear power revival.

We noted that with numerous nations around the globe announcing buildout plans and strategies to extend the life of existing power plants, and with the restart of multiple (Fukushima-idled) Japanese reactors, "2023 could turn into a banner f*cking year for U3O8 bulls."

Spot Uranium had just clawed back into the $50 zone. Today, the energy-dense metal is testing $90, its highest level in 16 years.

The serially successful Rick Rule saw it coming and positioned himself accordingly. A prescient Rule quote from early 2023: “There’s a billion people on Earth that have no access to electricity at all. There are 2 billion people on Earth who experience energy poverty, either intermittent energy or unaffordable energy. When we talk about energy in the West, we talk about stuff like Teslas,” he pointed out. “Increasing the living standards of the poorest of the poor means that we’re gonna need more energy from all sources. Solar, sure. Wind, yeah. Coal, of course. But nuclear is a wonderful source of post-construction, cheap, reliable, non-carbon generating baseload power.”

B2Gold Snags Sabina

Though this bit of gold arena M&A highlighted in?a February 16 Briefing didn't go down as an out-of-the-park home run for shareholders, it was a significant acquisition nonetheless -?B2Gold to buy Sabina Gold & Silver in $824 mln deal.

In an all-paper deal valued just north of $1B in Cdn dollars, mid-tier B2 locked in Sabina's district-scale?Back River Gold Project?in Canada's Nunavut Territories. This predatory move goosed B2's Au reserves by 66% to 9 million ounces and its measured and indicated resources by 52% to 18.5 million ounces.

Fully permitted, financed for construction, with all preconstruction activities completed, the district's first mine—Goose—is scheduled to produce ~223,000 ounces of gold a year over ~15 years from a reserve base of 3.6 million ounces averaging 5.97 g/t Au. A recent Feasibility study shows a post-tax IRR of ~28% and NPV5% of C$1.1B, factoring in $1,600 gold. Goose ranks as one of the highest-grade gold development projects on the planet.

Newmont Takes Out Newcrest

After a volatile courtship rife with misgivings and distrust, mining colossus Newmont finally put its signature to paper in a deal with Newcrest, an event we highlighted in?a May 18 Briefing?-?Newmont Acquires Newcrest, Creating World's Biggest Gold Mining Company.

It cost US$19.2 billion to gain control of a portfolio of assets—five gold mines spread across three continents—that elevate the mining behemoth's status to that of THE world's largest Au producer. Significantly, the deal also increases Newmont's exposure to copper (Newcrest generated roughly a quarter of its revenue from copper).

“This transaction will combine two of the world’s leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of our outstanding growth pipeline,” stated Newcrest’s chairman, Peter Tomsett.

With gold miners around the globe facing stagnating production, harder-to-mine (deeper) deposits, and rising costs, expect to see more of this type of M&A as companies look to bulk up their project pipelines.

New Found Tags Uber High-Grade

Every so often, an assay-related headline prompts a double take. This one, highlighted in?our June 8 2023 Briefing, did just that -?New Found Intercepts 105 G/T AU Over 27.1M at Iceberg.

From its wholly-owned?Queensway Project 15 kilometers west of Gander, Newfoundland, these uber high-grade values represent a new discovery—Iceberg—a high-grade zone located 300 meters northeast of the Keats Main zone along the company's highly prospective Appleton Fault Zone.

Publishing high-grade values from Queensway is a matter of routine for this (nearly) $900M company. Regarding the tremendous near surface hit highlighted in the text of the above headline, New Found Gold's VP of Exploration, Melissa Rende, had the following to say: "Discovering high-grade gold mineralization of this magnitude over such a thick interval is rare in nature, and yet, Queensway has produced several of these high-caliber hits across a multitude of zones. NFGC-23-1210 runs 27m in length with several distinct areas of strong quartz veining, laden with visible gold (Figure 1). Logging of the hole identified 1,153 counts of visible gold, which ranks as one of the highest seen at Queensway to date."

Gina Rinehart Blocks Albemarle's Attempts to Take Out Liontown?

Gina Rinehart, Australia's richest person at A$37 billion (estimated), generated the lion's share of lithium-related M&A headlines in 2023, one of which was highlighted in our October 2023 Briefing - Massive lithium takeover deal collapses following Rinehart intervention.

Shortly after Australia's Liontown Resources said it would extend an exclusive due diligence period to accommodate US-based Albemarle's proposed A$6.6 billion takeover offer for the formers?Kathleen Valley?lithium asset, Rinehart entered the fray with a commanding, deal-busting 19.9% blocking stake.

With reserves pegged at 68.5 million tonnes grading 1.34% lithium oxide, Kathleen Valley ranks as one of the largest and highest-grade hard rock lithium deposits in the world (economic studies demonstrate an after-tax NPV8% of A$ 4.2 billion and an IRR of 57%. Payback = 2.3 years).

In the wake of Rinehart's bold tactics, the US-based lithium giant backed away from its quarry, stating that "growing complexities associated with the proposed transaction is not in Albemarle's best interests."

A Boomer of a Cu Hit

One of the more impressive displays of positive-price-chart-trajectory in the junior arena was triggered by the 185-meter hit reported by Hercules Silver. We labelled this price action "trajectory envy" in?our October 2023 Briefing, after investors piled in -?Hercules Silver Intersects 185 Meters of 0.84% Cu, 111 ppm Mo and 2.6 g/t Ag, Including 45 Meters of 1.94% Cu in First Deep Hole Drilled at Hercules.

The solid hit of 185.29 meters of 0.84% Cu (and 111 ppm Mo) included a (super solid) 45.33-meter interval grading 1.94% Cu. Fueling speculation that there's more positive newsflow on deck, the company stated, "The hole ended prematurely due to drilling challenges encountered at a post-mineral dyke, however observations in subsequent holes indicate that the mineralization likely extends significantly below HER-23-05 at 435 meters."

Another trading frenzy was triggered in the stock when a mining behemoth carrying a big checkbook entered the fray. In?a November 9 Briefing, we stated: The move, which will put more than twenty-three mill in the company's till, boosts Barrick's stake in the junior miner to roughly 12% from its previous 2.7%. According to the Nov. 6 press release, 21,265,370 units priced at $1.10 per make up the deal―each unit includes one common share and 0.32 of a two-year warrant with a $1.32 strike price.

Provincial Authorities Greenlight Rook I

In?a November 16 2023 Briefing, we noted how NexGen, one of the more U3O8-rich junior players in the prolific Athabasca Basin, is getting its permit book stamped -?NexGen Receives Provincial Environmental Assessment Approval for the Rook I Project.

NexGen's flagship project―Rook I―is now on the cusp of meeting the surging global demand for ethically sourced U3O8.

Rook I's measured and indicated resource base currently stands at 3,754 KT grading 3.10% U308. That works out to 256.7M lbs of the energy-dense metal. Rook's?2021 feasibility study?outlines a mine capable of producing 29 Mlbs U308 per anum, which could make it the biggest and lowest-cost producer on the planet. With an after-tax NPV8 of $3.47 Billion, an IRR of 52.4%, and less than a year to payback (total CapEx = $1.3B), the company is ready for a solid push along the development curve. With the provincial EA approval in place, the company now awaits the completion of the federal EA process.

On the Ropes - Panama Edition

In a saga that showed no signs of letting up, delivering a non-stop conveyor belt of pain and hardship, we reported the massive blow Panama dealt a Canadian miner via?our?November 30 2023 Briefing?-?Panama's top court deals blow to Canada's First Quantum, rules mining contract unconstitutional.

Shortly after signing off on a contract allowing First Quantum to operate its?Cobre Panama?copper mine for the next 20 years (with an option to extend for another twenty) in return for a $375 million annual royalty, public opposition and the country's top court said no f*cking way.

There's a huge power vacuum in Panama right now. With elections coming up in May, the current prez is basically a lame duck, as is the country's legislature. Cobre Panama is the world's fifth-largest producer of a metal needed to support the global megatrends of decarbonization and electrification. The closure is an obvious setback for said trend. With the mine representing 5% of Panama's GDP and 40k people having been laid off in the process, the economic impact on the country is also a major setback, one that will prove devastating if the 'open sign' isn't flipped back over soon—that'll have to wait for the May elections. One thing is for sure: the first half of 2024 is going to be a bumpy ride for all involved.

Tighter Supplies Set to Goose Cu

In a world hell-bent on decarbonizing and electrifying everything in motion, some smart people are placing big bets on the future price direction of copper, that soft, malleable metal with superior thermal and electrical conductivity properties. In?our December 14 Briefing?we noted how?Ivanhoe Mines is set to quadruple its 2024 exploration budget.

After Panama put the kibosh on Cobre Panama, the bullish talk surrounding Cu began to ramp up -?Tighter supplies to create tailwind for copper prices.

Mine closures and disruptions are prompting analysts to adjust their price forecasts: "BMO Capital Markets, which was forecasting a large surplus of refined copper next year, now sees a small deficit instead. Goldman Sachs Group Inc — which has been much more bullish on copper and already forecast a deficit of refined metal for 2024, now sees that shortfall ballooning to more than half a million tons. Jefferies also now expects a major deficit next year."

Tooting Our Horn

We'd be remiss not to highlight this headline gem -?EarthLabs Closes Acquisition of The Northern Miner, Canadian Mining Journal and MINING.COM.

I've been following events in the junior exploration arena since my mid-teens. Every Tuesday, I used to make the 45-minute drive to the city center to buy the Northern Miner. Enjoyably readable and highly informative, the Northern Miner was often the highlight of my week. Mining.com is deft at homing in on mining-related news as it breaks. Both represent a solid acquisition.

(Horn tooted)

With twenty-three nearly in the rear-view mirror—from everyone here at CB Central—we wish you a healthy, happy and prosperous 2024.

Want to receive the Chairman's Briefing via email, before markets open?

Subscribe here

Disclaimer:

CEO.CA Chairman’s Briefing content and associated news and securities are for educational and illustrative purposes only.?This content should never be considered a recommendation to buy or sell any security or other asset. The source of any third-party content, in which CEO.CA Technologies Ltd. may receive compensation, is clearly and notably identified here as “Sponsored by” or “Sponsored” or “In Partnership With”. The information may not be complete or accurate and is subject to change without notice. CEO.CA Technologies Ltd., its affiliates and clients of CEO.CA Technologies Ltd. or its affiliates may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions. Information regarding the likelihood of various investment outcomes are hypothetical, are not guaranteed for accuracy or completeness, do not reflect actual investment results and are not assurances of future results. All investments involve risk, and the past performance of a security, industry, sector, market, or financial product does not guarantee future results or returns. Always do your own research before making any investment decisions. Thank you for reading the Chairman’s Briefing.