Newmont Mining has agreed to buyout NovaGold for $275 million for the Galore Creek project; Teck Resources will remain the other party in the deal. This is a typical strategy that we expect to see more of as major producers start ramping up resources to produce and meet demand. Throughout the weeks we have been hearing about 'peak gold' and the lack of major discoveries in the mining sector but that is starting to shift. A lot of time, money and expense has been put into Northwest BC,and the Yukon.
“Galore Creek holds the potential to support decades of profitable copper and gold production in a favorable mining jurisdiction, in line with our strategy to create long-term value for our stakeholders,” said Gary Goldberg, President and Chief Executive Officer. “Partnering with Teck allows us to bring both organizations’ considerable technical, financial and sustainability strengths to bear in evaluating and refining development plans for Galore Creek, and to build on the strong relationships Teck has established with the Tahltan First Nation and British Columbia.”
It has been lean and tough years for miners over the past years but this new report shows efficiencies and overall momentum in the sector. It is not knew for us.I have been posting the indicators and the reports from other analysts that have been hinting, highlighting and preparing for portfolio re-balancing with weighting towards mining. Now it is never 'kittens and cupcakes' when dealing with mining. There are plenty of stories from third world nations that remind us that are bad for PR. Glencore is currently in a situation right now but this is about the overall trend forward.The MSCI Metals and Mining Index of company share prices has rebounded even more dramatically—up more than two-and-a-half times from its low point, in January 2016. There has been a 2.8% increase in productivity of operated mines and employment in the sector is up.
Many companies have been focused on this efficiency, on technology to refine and mine better, and safer. New techniques and environmental regulations is helping to improve the impact mining can have, which is necessary. We have to mine. We will not survive in the modern world without mining. It is not a question, it is not worth pondering. We need mining for nearly everything we use in the modern world. Currently there are companies using environmentally friendly ways of leaching gold from tailing and we must continue to become greener as mining is the foundation of the green revolution.
Knowing that commodity prices have been rising, efficiency in operations has been strong it is obvious there is an opportunity in the stock price as these facts are not being priced. As previously reported John Paulson has created a fund to take advantage of this miss-pricing.
On top of that, there has been incredible spending by governments in favorable regions, and many explorers awaiting results from a summer drill season. Despite some of the gloom in the markets there is a lot of light in this sector.
Part of my job is to endure looking at some of the terrible click bait news and media propaganda outlets. Sometimes I find it entertaining and of course other times painful. The term is fake news and these media/entertainment companies range from complete false, fake news to opinion pieces by PR and lobbyist consultants as third party written infomercials. I can spot them quickly but most people cannot. Looking at Buzzfeed at their list of products hit by tariffs is a laughable....this is what you have to be worried about: channel changers price increase, water coolers, air purifiers, fish tank filters, flash drives, Christmas lights and on. The pieces that are harder to evaluate are ones like this Bloomberg opinion piece disguised as news.
News today is less about informing or providing reasonable analysis but entirely about persuading you about political opinions, on how should think and what beliefs you should have. 'Sportsball' shows like ESPN and TSN even spend half their time pitching 'leftthink' propaganda to keep their message in your mind 24/7. People stop paying attention because they do not want to hear an announcers opinion on race relation while watching baseball. People do not want to watch a sitcom or movie and get revisionist history and victim-hood stories. It is being reflected in the massive losses in media. But this is getting a bit too far off topic.
This article which is by Bloomberg a staunch hater of Trump puts the drop in copper prices on the tariffs. This is so simplistic and lazy in thinking that it is painful to read. Do you think that China and the US are not going to build infrastructure, power systems, batteries and energy, improve existing roads, bridges and other infrastructure? I do not care if some retail products cost more. They should cost more and be built if not in your own country, a region close to you. I have never liked the idea of saving $50 on my new tv so that it could be built by a Chinese company that would install spyware on it with a proletariat working for dollars a day in suicide proof 'campuses' then shipped via a massive container ship back to me to fail in about 4 years because of planned obsolescence. We should have trade. We should slow down the economy because most of it is based on fraud. When the wipe out comes it will be a long list of companies that have 500+PE ratio's that have 'new evaluation metrics' as their criteria just as the analyst tried to pitch during the dotcom purge. Some of these companies may survive because they are part of what we call the deep state, we scratch our heads at how these companies manage to operate until we see who runs them and who partners with them. It is not hard work to see.
Associating Trump as the reason for copper price escalation and then its drop makes the writer look foolish but luckily today no one cares. No one cares if the news constantly retracts statements on the back page or as a ticker tape scrolling by during a segment on how some Hollywood 'celebrity' endorses why eating insects is good. People do care if i lead them astray because they want some facts and they will get my opinions, too but they know when i quote something or link it, or if i say i think this or that. I live and die by results. I think there is a coming major economic disaster coming but their will be opportunities in commodities. There will be big gainers in junior mining companies, gold, and other stable, core, fundamental companies. There will also be a demand in all that makes up the war machine.
So, what could make the prices drop? Trading floors taking profits. Settlement of futures and options contracts. The fact that most investment is done by computers and algorithms with set parameters. The list is quite long but if you think it is because Trump places a tariff on water coolers then shake your head.
In a move to take control of his future and his ambitions billionaire founder Anil Agarwal offered $1 billion to minority shareholders of Vedanta. This would value the company at $3.1 billion dollars which shareholders feels is too low a valuation. Of course, minority shareholders say this bid is aggressively low and opportunistic but I imagine well expected. My impression would be that he would want to get the best deal for his company, which he started. He did not get to build such a company without getting into a few scraps. Nonetheless, it is an interesting story to follow.
Lithium demand from mobile phone companies, computers and other gadget is projected to increase 650% by 2027. A new report from Roskills Market Outlook Report and BMO are anticipating dramatic need for lithium. Even with some of the challenged facing the EVM it will move forward. The next 9 years will drain less than 1% of projected reserves in the ground demand is expected to keep building.
Even the development of vanadium batteries or Redox Batteries for large, industrial scale energy storage should not damped the demand for smaller personal technology usage.
The catalyst for change, in the mining sector seems to be surrounding the EVM orElectric Vehicle Market. All advances of this magnitude will cause issues but this is not a new idea. We have been prepping for the idea for 30 years or so when the first electric car came out. In fact the first electric vehicle was back in 1832 but that is another story. The first mass production type version was the Prius back in 1997 but most think of Tesla, right now. Frik Els printed that a new report from AlixPartners study expects $255 billion pouring into R&D and capital expenditures to bring some 207 electric models to the market by 2022. A further $61 billion has been earmarked for autonomous-vehicle technologies according to the study.
We did not have to wait long to hear a great deal of news coming out of Canada and the hints dropped by giant miner Vale. The Newfoundland Voisey’s Bay nickel mine owned by Brazilian company Vale will be investing $2 billion to convert the mine from an open pit to underground mine by 2021. This investment extends the life of the nickel/cobalt mine to 2035. Cobalt is a by-product of nickel and copper extraction and will be a major consideration in the funding and extension of this mine. Wheaton Precious Metals and Cobalt 27 will acquire a fixed percentage of cobalt production from Vale's Voisey's Bay mine for US$690 million for purchase of finished cobalt equal to 75% of Voisey's Bay cobalt production commencing January 1, 2021.
"We see numerous similarities between cobalt and silver, as both are primarily produced as by-products and both are integral to sustainable clean energy and electronics" said Randy Smallwood, Wheaton's President and Chief Executive Officer.
This is great news for the mining sector, and for the province which could use the employment and revenue. The mining of cobalt is primarily done in the Congo, so having such a major deal done here in Canada is welcomed and shows not only the interest in coming to safe investment jurisdictions but recognition of markets to the demand for materials needed in the electric vehicle market.
CITIC Mining, a Chinese state-owned conglomerate will become Canada's Ivanhoe Mines’ biggest shareholder after billionaire Robert Friedland’s company agreed to sell a 20% stake for about $560 million. This has been a long-term relationship between Ivanhoe and CITIC, nearly 15 years in which the company was struggling with developing a copper/gold mine in Mongolia. As we know, there are a myriad of issues that arise when dealing with foreign countries laws, regulations, customs and best interest. This long-term relationship is a great example of how producers and countries can work together to match the demand required for future growth.
“In 2003, the original Ivanhoe Mines was grappling with the challenge of developing its vast copper-gold discoveries at the Oyu Tolgoi Project in southern Mongolia. Following extensive discussions, Ivanhoe and CITIC established a strategic alliance to cooperatively pursue a number of selected common interests in metals production and related technologies.”
There has been a great deal of revived enthusiasm for copper as we seem demand increasing particularly y becase of electric vehicle growth. Ivanhoe’s flagship Kamoa-Kakula project in the Democratic Republic of Congo – considered the most significant copper discovery in decades. The money will be put to good use in this project as China also has a strong appetite for copper, with consuming roughly 50% of copper a year.