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Copper Price Decline Is Overdone, Even With Demand Slowdown

March 12, 2014
 

Copper Price Copper prices dropped to US$2.94/lb yesterday, a 12% decline from the start of the year and 8.5% since a week ago.

According to BMO:

The recent copper price decline was a China-driven event (corporate bond default and weak trade data), exacerbated by growing negative market sentiment toward copper since early 2014. In addition, bonded warehouse inventories are estimated to have increased to 745kt in recent weeks, and there is now speculation that the PBoC’s deliberate yuan depreciation is aimed at tackling metal financing, potentially releasing this copper to the market. However, BMO Research believes the drop to sub-$3.00/lb levels is overdone based on base-case forecasts for a still-tight market this year. In other words, BMO expects any inventory that comes to market would be eventually absorbed by real demand, supporting copper prices on average through the year. China’s demand from the power, transport, and consumer goods sectors are expected to remain strong, particularly given the State Grid’s commitment to increase spending by 13% in 2014. A potential downside risk, in BMO’s view, is from China’s... [Read more...]

Why Gold Stocks are Leading Gold

January 24, 2014
 

by Jordan Roy-Byrne, CMT

At the start of the year we asserted that the mining equities could lead the metals higher. Since then, the shares have roared higher while the metals have remained subdued. Gold has gained a bit but Silver has really struggled. Why are the stocks performing so well if the metals are not confirming?

The main reason is the stocks led the metals down (specifically Gold) during the bear market. The chart below plots CDNX (Canadian juniors), GDXJ (US juniors), GDX (large caps) and Gold. Note that both junior markets peaked months before Gold. GDX technically peaked at the same time but began its topping process in December 2010, well before Gold peaked.

The stocks essentially began to underperform in December 2010 and then peaked a few months later. Most companies peaked even before Gold went parabolic! As a result, most mining stocks have been in a bear market longer than Gold and may have already discounted the worst. It makes sense that they would bottom first and there is a precedent for that scenario.

The chart below shows the action in the HUI and Gold during the 2000-2001 bottom. The... [Read more...]

INTERVIEW: Potential iron giant moves to feasibility

November 14, 2013
 

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Interview with Adriana Resources’ (TSXV:ADI) Allen Palmiere By: Doug Hadfield

Volume on TSX Venture Exchange is down quite significantly in 2013. Last month saw a 16 per cent decline year on year from October 2012. The TSXV composite index has dropped from 1,300 a year ago to 941 today, which is just above its lowest point since December 2008, that being its lowest level since it was acquired by the TSX in 2001. Retail investors continue to be absent from the usual investor shows, institutional investors remain scarce and even the best resource companies are trading at a significant discount to their valuations. What’s an investor to do?

Ironically, now could be the best time to get out from under the table and invest. Recall in early 2008 when investors continued running for the doors and how 12 months later, many were kicking themselves for not taking advantage of the terrifically discounted companies sooner? This is a bottom feeder’s delight, and the good ones are now looking for well financed juniors with multi-billion dollar valuations... [Read more...]

INTEL: In search of behemoth porphyries in British Columbia’s Golden Triangle

October 24, 2013
 

Grizzly Resources

The 10,000 sq km area of the Golden Triangle hosts $100s of billions in undeveloped deposits

By Doug Hadfield, Managing Editor, resourceINTELLIGENCE

Right about the time I was busy being born back in July 1970, a mining company called Great Plains Development Company of Canada was in the process of drilling two exploratory holes into its “Chris” claims, in northern British Columbia. These two holes would lead to a series of events that would culminate in the development of the Red Chris Mine, scheduled to begin production by May of next year.

The mine will process an astounding 30,000 tonnes of copper-gold-silver-infused rock every day for the duration of its mine life. That’s the equivalent of extracting six Statues of Liberty every hour, 24 hours a day, and crushing them into gravel—pretty much every day for 28 years.

Red Chris has reserves of over 300 million tonnes grading 0.359% copper and 0.274 g/t gold, plus additional low grade silver, however, the known resources outside the open pit model are ten times that amount.

The mine is expected to generate... [Read more...]

INTEL: Quest delivers PFS, NPV $2.9 Bn

October 23, 2013
 

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North America may soon have its first domestic supply of rare earth elements, the key materials used in applications from smart phones to smart cars to “smart” bombs.

Quest Rare Minerals (TSX:QRM) today announced the results of a positive prefeasibility study for its Strange Lake REE project, and the numbers are very good.

The PFS predicts an internal rate of return (IRR) of 25.6% pre-tax and 21.2% post-tax. The net present value (NPV) of the project pre-tax with a 10% discount rate is $2.9 billion and $1.8 billion post-tax.

The project will generate on average $1.047 billion of revenue per year, comprised of 55.8% from the sale of HREE+Y concentrate, 17.3% from the sale of zirconium product, 12.9% from the sale of niobium product, and 13.9% from the sale of a light rare earth (LREE) concentrate.

The company’s consultants estimate total construction capital costs for development of its deposit at $2.57 billion, based on a minimum mine life of 30 years. It will be one of the world’s largest and highest-grade heavy rare-earth mining projects... [Read more...]

INVESTOR INTEL: SilverCrest Mines announces record production, expansion nears completion

October 16, 2013
 

Stalwart SilverCrest Mines (TSXV:SVL) announced yesterday that production data for the third quarter of 2013 from its Santa Elena Mine had once again met expectations. The company is a favourite among precious metals bulls for its ability to meet or surpass targets virtually without fail.

Production highlights for Santa Elena for Q3 see the company surpassing some targets and slightly off on others, but successful overall for the quarter. The challenge for the company is to maintain growing production targets each quarter while completing an ambitious expansion program that will see the company significantly increase production by early 2014.

Reserves on the project have jumped significantly over the past year or so. In January 2012 the company had 217K ounces gold and 9.7 million ounces silver in reserve categories. This April the company increased that to 327K ounces gold and 19.7 million ounces silver.

N. Eric Fier, President and COO stated; “Santa Elena continued its solid operating performance during the third quarter closely matching our projections. For the first nine months of 2013, silver production was 550,239 ounces and gold production was 21,881 equaling 1.87 million ounces AgEQ. We maintain our expectation that... [Read more...]

INTERVIEW INTEL: Ivanhoe Mines soars on drill results

October 16, 2013
 

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This could become the quote of the year for the resource sector: “This is an extraordinary drill hole. The 90-metre thickness of the intercept, which roughly is the same height as a 30-storey building, is unprecedented at Platreef and I believe it also is without precedent in an underground platinum discovery in South Africa.”

These comments come from Robert Friedland, whose Ivanhoe Mines (TSE:IVN) jumped more than 7% to $2.28 per share on Wednesday.

The drill hole in question intersected mineralization containing 4.51 grams per tonne of platinum, palladium, rhodium and gold (4PGE) over 90.64 metres (297 feet) at a 1 g/t 3PE cut-off in a recently drilled hole at the underground Flatreef platinum, palladium, nickel, copper, gold and rhodium discovery, which is part of the company’s Platreef Project in South Africa’s Bushveld Complex.

The 90.64-metre intersection also included a 40.79-metre (134-foot) section grading 6.88 grams per tonne 4PGE at a 3g/t 3PE cut-off with additional nickel and copper mineralization... [Read more...]

INVESTOR INTEL: First Majestic Silver grows San Martin

October 15, 2013
 

The San Martin Silver mine is located in Mexico in the state of Jalisco, 150 kilometers north of Guadalajara City, with additional surface rights where the processing plant, office facilities, maintenance shops and tailings dam are located.

Initial mining operations began at San Martin in 1983. The mine was purchased by First Majestic Silver in 2006.

The mill recently received a major expansion to 1,300 tpd, which is projected to increase annual silver production by over 50% to between 1.4 and 1.6 million ounces of silver poured into dore bars that contain silver and modest amounts of gold.

Mineralized ore is processed in a conventional circuit that includes crushing, grinding and cyanidation by agitation in tanks.

Historically, the majority of San Martin’s silver and gold has been mined from the main Zuloaga vein.

From October 2008 to the end of 2012, First Majestic operated an aggressive exploration program that included both underground and surface drilling of over 61,000 metres in 435 drill holes. This has lead to the expansion of numerous mineralized zones, and the development of new mines such as the Rosaria Mine.

In early 2013, First Majestic released an updated NI 43-101 technical report showing Proven and Probable silver Reserves increased by 224% to 21.6 million... [Read more...]

Comment: New and old uses to drive demand for silver and graphite

October 15, 2013
 

Screen Shot 2013-10-04 at 11.58.37 AMSource: Lorne Woods, President and CEO, Sunset Cove Mining

At Sunset Cove we said when we announced the acquisition of the Lac Guéret Graphite project that one of the reasons we decided to add a graphite property to our portfolio which consists of the highly promising Carolay Polymetallic Silver project in Peru is that we looked at both minerals as strategic minerals that together would help form one of the keystones of the industrial and technological future.

Somewhere at the back of our minds, as we did our due diligence on graphite, some of us may have reached the conclusion that it would only be a matter of time before the two elements were used in some joint application, but if they did, nobody mentioned it.

And now here it is. Chinese medical researchers are using graphene oxide produced from graphite to enhance silver’s properties as an antibacterial agent. Silver has long been known as a safe way to store water and wine. “Born with a silver spoon in his mouth,” refers not to being brought up in a wealthy household but being raised... [Read more...]

China buying massive quantities of gold to de-Americanize global economy

October 15, 2013
 

(Bloomberg) — Tangent Capital Partners Senior Managing Director Jim Rickards discusses China and world reaction to the U.S. debt ceiling debacle. He speaks with Deirdre Bolton on Bloomberg Television’s “Money Moves.” (Source: Bloomberg)

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